EXHIBIT 2.1
AGREEMENT OF AFFILIATION AND MERGER
BY AND AMONG
BLUE RIVER BANCSHARES, INC.
AND
SHELBY COUNTY BANK
AND
HEARTLAND BANCSHARES, INC.
AND
HEARTLAND COMMUNITY BANK
AUGUST 31, 2004
TABLE OF CONTENTS
SECTION 1 THE MERGERS................................................................................... 2
1.01. The Company Merger................................................................. 2
1.02. The Bank Merger.................................................................... 4
1.03. Tax Free Reorganization............................................................ 4
SECTION 2 CONSIDERATION................................................................................. 4
2.01. Conversion of Heartland Common Stock............................................... 4
2.02. No Fractional Shares............................................................... 4
2.03. Distribution of Blue River Common Stock and Cash................................... 5
2.04. Treatment of Heartland Stock Options............................................... 6
SECTION 3 DISSENTING SHAREHOLDERS....................................................................... 7
SECTION 4 REPRESENTATIONS AND WARRANTIES OF HEARTLAND................................................... 8
4.01. Organization and Authority......................................................... 9
4.02. Authorization...................................................................... 9
4.03. Capitalization..................................................................... 11
4.04. Organizational Documents........................................................... 13
4.05. Compliance with Law................................................................ 13
4.06. Litigation and Pending Proceedings................................................. 13
4.07. Financial Statements and Reports................................................... 14
4.08. Properties, Contracts, and Agreements.............................................. 14
4.09. Absence of Undisclosed Liabilities................................................. 15
4.10. Title to Assets.................................................................... 16
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4.11. Employee Benefit Plans............................................................. 16
4.12. Labor Matters...................................................................... 18
4.13. Environmental Matters.............................................................. 18
4.14. Tax Matters........................................................................ 19
4.15. Risk Management.................................................................... 20
4.16. Books and Records.................................................................. 20
4.17. Loans.............................................................................. 20
4.18. Shareholder Rights Plan............................................................ 21
4.19. Deposit Insurance.................................................................. 21
4.20. Insurance.......................................................................... 21
4.21. Broker's, Finder's or Other Fees................................................... 21
4.22. Interim Events..................................................................... 21
4.23. Regulatory Filings................................................................. 22
4.24. Indemnification Agreements......................................................... 22
4.25. Shareholder Approval............................................................... 23
4.26. CRA Rating......................................................................... 23
4.27. Capital Requirements............................................................... 23
4.28. Accuracy of Statements Made and Materials Provided to Blue River................... 23
SECTION 5 REPRESENTATIONS AND WARRANTIES OF BLUE RIVER AND SHELBY COUNTY BANK........................... 24
5.01. Organization and Authority......................................................... 25
5.02. Authorization...................................................................... 25
5.03. Capitalization..................................................................... 27
5.04. Shares to be issued in the Company Merger.......................................... 29
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5.05. Organizational Documents........................................................... 29
5.06. Compliance with Law................................................................ 29
5.07. Litigation and Pending Proceedings................................................. 30
5.08. Financial Statements and Reports................................................... 30
5.09. Properties, Contracts, and Agreements.............................................. 31
5.10. Absence of Undisclosed Liabilities................................................. 32
5.11. Title to Assets.................................................................... 32
5.12. Employee Benefit Plans............................................................. 33
5.13. Labor Matters...................................................................... 35
5.14. Environmental Matters.............................................................. 35
5.15. Tax Matters........................................................................ 36
5.16. Risk Management.................................................................... 36
5.17. Books and Records.................................................................. 36
5.18. Loans.............................................................................. 36
5.19. Shareholder Rights Plan............................................................ 37
5.20. Deposit Insurance.................................................................. 37
5.21. Insurance.......................................................................... 37
5.22. Broker's, Finder's or Other Fees................................................... 38
5.23. Interim Events..................................................................... 38
5.24. Regulatory Filings................................................................. 38
5.25. Indemnification Agreements......................................................... 39
5.26. Shareholder Approval............................................................... 39
5.27. CRA Rating......................................................................... 39
5.28. Capital Requirements............................................................... 39
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5.29. Accuracy of Statements Made and Materials Provided to Heartland.................... 39
SECTION 6 COVENANTS OF HEARTLAND AND HEARTLAND BANK..................................................... 40
6.01. Shareholder Approval............................................................... 40
6.02. SEC Registration................................................................... 41
6.03. Other Approvals and Actions........................................................ 41
6.04. Conduct of Business................................................................ 42
6.05. Preservation of Business........................................................... 45
6.06. Other Negotiations................................................................. 45
6.07. Restrictions Regarding Affiliates.................................................. 46
6.08. Press Releases..................................................................... 46
6.09. Disclosure Schedule Update......................................................... 46
6.10. Information, Access Thereto, Confidentiality....................................... 47
6.11. Subsequent Heartland Financial Statements.......................................... 48
6.12. Employee Benefits.................................................................. 48
6.13. Redemption of Rights............................................................... 48
6.14. Reports............................................................................ 49
6.15. Indemnification.................................................................... 49
6.16. Adverse Actions.................................................................... 50
SECTION 7 COVENANTS OF BLUE RIVER AND SHELBY COUNTY BANK................................................ 50
7.01. Shareholder Approval............................................................... 51
7.02. SEC Registration................................................................... 51
7.03. Other Approvals and Actions........................................................ 52
7.04. Conduct of Business................................................................ 53
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7.05. Preservation of Business........................................................... 56
7.06. Other Negotiations................................................................. 56
7.07. Press Releases..................................................................... 57
7.08. Blue River Disclosure Schedule Update.............................................. 57
7.09. Information, Access Thereto, Confidentiality....................................... 57
7.10. Subsequent Blue River Financial Statements......................................... 59
7.11. Employee Benefits.................................................................. 59
7.12. Reports............................................................................ 59
7.13. Indemnification.................................................................... 60
7.14. Adverse Actions.................................................................... 61
7.15. By-Law Amendments; Directors; Officers; Resignations............................... 61
SECTION 8 CONDITIONS PRECEDENT TO THE MERGERS........................................................... 61
8.01. Blue River......................................................................... 61
8.02. Heartland.......................................................................... 63
SECTION 9 TERMINATION OF MERGERS........................................................................ 66
9.01. Manner of Termination.............................................................. 66
9.02. Effect of Termination.............................................................. 68
SECTION 10 CLOSING...................................................................................... 68
10.01. Closing Date and Place............................................................. 68
10.02. Deliveries......................................................................... 68
SECTION 11 MISCELLANEOUS................................................................................ 69
11.01. Non-survival of Representations, Warranties and Agreements......................... 69
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11.02. Binding Effect; Assignment......................................................... 69
11.03. Waiver; Amendment.................................................................. 69
11.04. Notices............................................................................ 70
11.05. Headings........................................................................... 71
11.06. Severability....................................................................... 71
11.07. Counterparts....................................................................... 71
11.08. Governing Law; Enforcement; Specific Performance; Jury Trial....................... 71
11.09. Entire Agreement................................................................... 71
11.10. Expenses........................................................................... 72
11.11. Certain References................................................................. 72
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AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER (the "Agreement") is made and
entered into, effective as of the 31st day of August, 2004, by and among Blue
River Bancshares, Inc. ("Blue River"), Shelby County Bank, Heartland Bancshares,
Inc. ("Heartland") and Heartland Community Bank ("Heartland Bank").
WITNESSETH:
WHEREAS, Blue River is an Indiana corporation registered as a savings and
loan holding company under the Home Owners Loan Act, as amended ("HOLA"), with
its principal office located in Shelbyville, Shelby County, Indiana; and
WHEREAS, Blue River is the sole owner, directly or indirectly, of all of
the outstanding capital stock of Shelby County Bank and Unified Banking Company
("Unified") (collectively, the "Blue River Subsidiaries"); and
WHEREAS, Heartland is an Indiana corporation registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHC Act")
with its principal office located in Franklin, Xxxxxxx County, Indiana; and
WHEREAS, Heartland is the sole owner, directly or indirectly, of all of
the outstanding capital stock of Heartland Bank; and
WHEREAS, Blue River and Heartland seek to affiliate through a corporate
reorganization whereby Heartland will merge with and into Blue River, with Blue
River surviving the merger and continuing under the changed name "Heartland
Bancshares, Inc.";
WHEREAS, immediately following the merger of Heartland into Blue River,
Shelby County Bank will merge with and into Heartland Bank, with Heartland Bank
surviving the merger and continuing under the name "Heartland Community Bank";
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) as a condition and inducement to Blue River's willingness to enter into this
Agreement and the Blue River Stock Option Agreement referred to below, Blue
River and Heartland are entering into a Stock Option Agreement dated as of the
date hereof in the form of Exhibit A (the "Heartland Stock Option Agreement")
pursuant to which Heartland is granting to Blue River an option to purchase
shares of Common Stock, no par value, of Heartland (the "Heartland Common
Stock"); and (ii) as a condition and inducement to Heartland's willingness to
enter into this Agreement and the Heartland Stock Option Agreement, Heartland
and Blue River are entering into a Stock Option Agreement dated as of the date
hereof in the form of Exhibit B (the "Blue River Stock Option Agreement"; and
collectively with the Heartland Stock Option Agreement, the "Option
Agreements"), pursuant to which Blue River is granting to Heartland an option to
purchase
shares of Common Stock, no par value per share, of Blue River (the "Blue River
Common Stock");
WHEREAS, Blue River, Shelby County Bank, Heartland and Heartland Bank
intend for the Mergers (as defined herein) to qualify as reorganizations within
the meaning of Section 368 and related sections of the Internal Revenue Code of
1986, as amended (the "Code"), and agree to cooperate and take such actions as
may be reasonably necessary to assure such result; and
WHEREAS, the respective Boards of Directors of each of Blue River, Shelby
County Bank, Heartland and Heartland Bank have determined that it is in the best
interests of their respective corporations or banks to consummate the business
combinations and other transactions contemplated by this Agreement and that such
transactions are consistent with, and in furtherance of, their respective
business strategies and goals, and have approved this Agreement, authorized its
execution and designated this Agreement a plan of merger.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements herein contained and in
the Option Agreements and other good and valuable consideration, the sufficiency
of which is hereby acknowledged, the parties hereby make this Agreement and
prescribe the terms and conditions of the merger of Heartland with and into Blue
River and Shelby County Bank with and into Heartland Bank and the mode of
carrying such Mergers into effect as follows:
SECTION 1
THE MERGERS
1.01. The Company Merger.
(a) General Description. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.01(b) hereof),
Heartland shall merge with and into Blue River (the "Company Merger") pursuant
to the provisions of the Indiana Business Corporation Law ("IBCL"). The Company
Merger is subject to the Bank Merger (as defined in Section 1.02 hereof)
occurring immediately after the Company Merger, and if the Bank Merger will not
close immediately thereafter, the Company Merger shall not occur. Blue River
(sometimes hereinafter referred to as the "Surviving Corporation") shall survive
the Company Merger and shall continue its corporate existence under the laws of
the State of Indiana pursuant to the provisions of and with the effect provided
in the IBCL.
(b) Effective Time. Upon the terms and subject to the conditions
specified in this Agreement, unless otherwise mutually agreed to by the parties
hereto, the parties shall cause the Company Merger to become effective at 5:00
p.m. on the last business day of the month (the "Effective Time") during which
each of the following has been satisfied: (a) the fulfillment of all conditions
precedent to the Mergers set forth in Section 8 of this Agreement (other than
conditions relating solely to the delivery of documents dated as of the Closing
Date, and conditions that may be waived pursuant to applicable law and have been
waived by the party entitled to the benefits thereof), and (b) the expiration of
all waiting periods, if any, in connection
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with any regulatory application filed for the approval of the Transaction. The
closing of the Mergers shall take place at the law offices of Xxxxx XxXxxxx LLP,
Xxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx 00000 at 11:00 a.m., local
time, on the date that the Effective Time occurs (the "Closing Date"), or on
such other date and/or at such other place and time as the parties may agree.
(c) Name. The name of the Surviving Corporation shall be "Heartland
Bancshares, Inc." Its principal office shall be located at 00 X. Xxxxxxxx
Xxxxxx, Xxxxx 000X, Xxxxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxxx.
(d) Executive Officers. As of the Effective Time, the following named
persons will be elected to serve as the executive officers of the Surviving
Corporation, holding the offices listed next to their names, until the next
annual meeting of the Board of Directors, and until their successor or
successors are elected and qualified or until their earlier resignation, death,
or removal from office:
NAME OFFICE
---- ------
Xxxxxxx Xxxxxxx, III Chairman and Chief Executive Officer
Xxxxxxx X. Xxxxx Chief Financial Officer
Xxxxx X. Xxxxxxx Executive Vice President, Secretary
and Chief Credit Officer
Xxxxxx X. Xxxxxxx Executive Vice President
(e) Directors. As of the Effective Time, the Board of Directors of the
Surviving Corporation shall be comprised of nine persons and the following named
individuals will be elected as directors of the Corporation in the Class and for
the term set forth next to their names, to serve until their successors are duly
elected and qualified or until their earlier resignation, death or removal from
office:
NAME CLASS TERM EXPIRING
---- ----- -------------
Xxxxxxx Xxxxxxx, III (Chairman) I 2006
Xxxx Xxxxxx I 2006
Xxxxxxx X. Xxxxxxx I 2006
Xxxxxx X. Xxxx XX 2007
Xxxxxx Xxxx XX 2007
Xxxxxx X. Xxxxxxx XX 2007
Xxxxx X. Xxxxxx III 2008
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Xxxx X. Xxxxx III 2008
Xxxxxxx Xxxxxx III 2008
(f) Articles of Incorporation and By-Laws. The Articles of Incorporation
of the Surviving Corporation shall be amended and restated in their entirety as
set forth on Exhibit C hereto at the Effective Time and shall remain the
Articles of Incorporation of the Surviving Corporation until such Articles of
Incorporation shall be further amended in accordance with applicable law. The
By-Laws of Blue River shall be amended by action of the Board of Directors of
Blue River, in accordance with Section 7.15(a) of this Agreement, effective the
Effective Time, and such amended By-Laws shall constitute the Bylaws of the
Surviving Corporation following the Effective Time until such By-Laws shall be
further amended in accordance with applicable law.
(g) Effect of the Company Merger. The Merger shall have the effects
specified by the IBCL.
1.02. The Bank Merger. Shelby County Bank and Heartland Bank agree to take
all action necessary and appropriate, including entering into a plan of merger
(the "Bank Merger Agreement") substantially in the form attached hereto as
Exhibit D, to cause Shelby County Bank to merge with and into Heartland Bank
(the "Bank Merger") in accordance with the applicable laws and regulations as
soon as practicable after the consummation of the Company Merger.
1.03. Tax Free Reorganization. Blue River, Shelby County Bank, Heartland
and Heartland Bank intend for the Mergers to qualify as a reorganization within
the meaning of Section 368 and related sections of the Code, and agree to
cooperate and to take such actions as may be reasonably necessary to assure such
result.
SECTION 2
CONSIDERATION
2.01. Conversion of Heartland Common Stock. Subject to Section 2.03 and
Section 3, and upon and by virtue of the Company Merger becoming effective at
the Effective Time, each share of Heartland Common Stock that is issued and
outstanding at the Effective Time (including the accompanying preferred share
purchase right, which shall be deemed redeemed in exchange for the consideration
issuable to holders of Heartland Common Stock under this Agreement and thereby
cancelled and extinguished as of the Effective Time) shall be converted by
operation of law and without any act on the part of the holder thereof into 2.54
shares of Blue River Common Stock ("Exchange Ratio").
2.02. No Fractional Shares. Certificates for fractional shares of Blue
River Common Stock shall not be issued for fractional interests resulting from
application of the Exchange Ratio. Each shareholder of Heartland who would
otherwise have been entitled to a fraction of a share of Blue River Common Stock
shall be paid in cash following the Effective Time an amount
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equal to such fraction multiplied by the average of the average of the highest
closing bid price per share and the lowest closing asked price per share, as
reported by NASDAQ with respect to Blue River Common Stock, during the period of
five trading days ended immediately preceding the Closing Date.
2.03. Distribution of Blue River Common Stock and Cash.
(a) Immediately following the Effective Time, the Surviving Corporation
shall mail to each Heartland shareholder of record at the Effective Time a
letter of transmittal providing instructions as to the transmittal to the
Surviving Corporation of certificates formerly representing shares of Heartland
Common Stock and the issuance of certificates for the shares of Blue River
Common Stock that were issued in exchange therefor pursuant to the terms of this
Agreement.
(b) Following the Effective Time, distribution of stock certificates
representing shares of Blue River Common Stock and any cash payment, without
interest, for fractional shares, if any, shall be made by Blue River to each
former shareholder of Heartland as soon as practical following delivery to Blue
River of the shareholder's certificate(s) representing its shares of Heartland
Common Stock accompanied by a properly completed and executed letter of
transmittal, all in form and substance reasonably satisfactory to Blue River.
(c) As of and following the Effective Time, stock certificates formerly
representing shares of Heartland Common Stock shall be deemed to evidence
ownership of Blue River Common Stock for all corporate purposes. No dividends or
other distributions otherwise payable to holders of Blue River Common Stock of
record as of any time after the Effective Time shall be paid to any former
Heartland shareholder entitled to receive the same until such shareholder has
surrendered to Blue River his or her certificate or certificates formerly
representing Heartland Common Stock. Upon the surrender of certificates formerly
representing shares of Heartland Common Stock, the Surviving Corporation shall
pay in cash to the record holder of the new certificate or certificates
evidencing shares of Blue River Common Stock the amount (if any) of all such
dividends and other distributions, without interest thereon, that had been
withheld with respect to such shares of Blue River Common Stock.
(d) Blue River shall be entitled to rely upon the stock transfer books
of Heartland to establish the persons entitled to receive shares of Blue River
Common Stock pursuant to this Agreement, which books shall be conclusive with
respect to the ownership of shares of Heartland Common Stock.
(e) With respect to any certificate formerly representing shares of
Heartland Common Stock which has been lost, stolen or destroyed, Blue River
shall be authorized to withhold delivery of certificates for Blue River common
stock (and payment of cash as to fractional shares) to the registered owner of
such certificate pending receipt by Blue River of an affidavit of lost, stolen
or destroyed stock certificate together with an indemnity bond, both in form and
substance reasonably satisfactory to Blue River, and upon compliance by the
former Heartland
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shareholder with all other reasonable requirements of Blue River in connection
with lost, stolen or destroyed stock certificates.
2.04. Treatment of Heartland Stock Options.
(a) At the Effective Time, all stock options granted by Heartland under
its three stock option plans identified in its Annual Report on Form 10-KSB for
its fiscal year ended December 31, 2003 (the "Heartland Stock Option Plans")
that are then outstanding, regardless of whether they are then exercisable (the
"Heartland Stock Options") shall cease to represent a right to acquire shares of
Heartland Common Stock and shall be converted automatically into an option to
purchase shares of Blue River Common Stock, and Blue River shall assume the
obligations of Heartland under the Heartland Stock Options, in accordance with
the terms of the Heartland Stock Option Plans and the stock option or other
agreements by which they are evidenced, except that from and after the Effective
Time, (i) Blue River and the Compensation Committee of its Board of Directors
shall be substituted for Heartland and the committee of the Board of Directors
of Heartland (including, if applicable, the entire Board of Directors of
Heartland) administering such Heartland Stock Option Plan, (ii) the Heartland
Stock Options may be exercised solely for shares of Blue River Common Stock,
(iii) the number of shares of Blue River Common Stock subject to such Heartland
Stock Options shall be equal to the number of shares of Heartland Common Stock
subject to such Heartland Stock Options immediately prior to the Effective Time
multiplied by the Exchange Ratio, provided that any fractional shares of Blue
River Common Stock resulting from such multiplication shall be rounded to the
nearest whole share, and (iv) the per share exercise price under such Heartland
Stock Options shall be adjusted by dividing the per share exercise price under
the Heartland Stock Options in effect immediately prior to the Effective Time by
the Exchange Ratio, provided that such exercise price shall be rounded to the
nearest cent. Notwithstanding clauses (iii) and (iv) of the preceding sentence,
each Heartland Stock Options which is an "incentive stock option" shall be
adjusted as required by Section 424 of the Code, and the regulations promulgated
thereunder, so as not to constitute a modification, extension or renewal of the
option within the meaning of Section 424(h) of the Code but with the smallest
modification to the economic values that otherwise would be achieved by the
option holder. Blue River and Heartland agree to take all necessary steps to
effect the foregoing provisions of this Section 2.04.
(b) The Surviving Corporation shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Blue River Common Stock
for delivery upon exercise of Heartland Stock Options assumed by it in
accordance with this Section 2.04. As soon as practicable after the Effective
Time, the Surviving Corporation shall file a registration statement on Form S-8
(or any successor or other appropriate forms), with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the shares of Blue River Common Stock subject
to such Heartland Stock Options and shall use its reasonable efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Heartland Stock Options remain outstanding. With respect to
those individuals who subsequent to the Company Merger will be subject to the
reporting requirements under Section 16(a) of the Securities Exchange Act of
1934, as amended (the
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"Exchange Act"), where applicable, with respect to Blue River Common Stock, the
Surviving Corporation shall administer the Heartland Stock Option Plans assumed
pursuant to this Section 2.04 in a manner that complies with Rule 16b-3
promulgated under the Exchange Act.
(c) Assuming that Heartland delivers to Blue River the Section 16
Information (as defined below) reasonably in advance of the Effective Time, the
Board of Directors of Blue River, or a committee of Non-Employee Directors
thereof (as such term is defined for purposes of Rule 16b-3(d) under the
Exchange Act), shall reasonably promptly thereafter and in any event prior to
the Effective Time adopt a resolution providing that the receipt by the
Heartland Insiders (as defined below) of Blue River Common Stock in exchange for
shares of Heartland Common Stock, and of options to purchase Blue River Common
Stock upon conversion of Heartland Stock Options, in each case pursuant to the
transactions contemplated hereby and to the extent such securities are listed in
the Section 16 Information provided by Heartland to Blue River prior to the
Effective Time, are intended to be exempt from liability pursuant to Section
16(b) under the Exchange Act such that any such receipt shall be so exempt.
"Section 16 Information" shall mean information accurate in all material
respects regarding the Heartland Insiders, the number of shares of Heartland
Common Stock held by each such Heartland Insider and the number and description
of the Heartland Stock Options held by each such Heartland Insider. "Heartland
Insiders" shall mean those executive officers and directors of Heartland who are
identified as such by Heartland's Annual Report on Form 10-KSB for the year
ended December 31, 2003, and any other persons who may be identified from time
to time prior to the Effective Time to Blue River by Heartland.
SECTION 3
DISSENTING SHAREHOLDERS
If any holders of Heartland Common Stock notify Heartland, before the vote
is taken of Heartland's shareholders on the question of approval of the Company
Merger, of their intent to demand payment for their shares of Heartland Common
Stock if the Company Merger is effectuated and do not vote in favor of the
Company Merger ("Heartland Dissenting Shareholders"), then any issued and
outstanding shares of Heartland Common Stock held by such Heartland Dissenting
Shareholders shall not be converted as described in Section 2 at the Effective
Time but shall from and after the Effective Time represent only the right to
receive such consideration as may be determined to be due to such Heartland
Dissenting Shareholders pursuant to the IBCL; provided, however, that each share
of Heartland Common Stock outstanding immediately prior to the Effective Time
and held by a Heartland Dissenting Shareholder who does not, after the Effective
Time, timely take all additional actions required by IC 23-1-44-13 in order to
be eligible to demand payment with respect to such holder's Heartland Common
Stock shall, as of the date of such failure to have taken such actions on a
timely basis, be deemed to have voted in favor of the Company Merger and
accordingly no longer to be a Heartland Dissenting Shareholder.
If any holders of Blue River Common Stock notify Blue River, before the
vote is taken of Blue River's shareholders on the question of approval of the
Company Merger, of their intent to
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demand payment for their shares of Blue River Common Stock if the Company Merger
is effectuated and do not vote in favor of the Company Merger ("Blue River
Dissenting Shareholders"), then any issued and outstanding shares of Blue River
Common Stock held by such Blue River Dissenting Shareholders shall from and
after the Effective Time represent only the right to receive such consideration
as may be determined to be due to such Blue River Dissenting Shareholders
pursuant to the IBCL; provided, however, that each share of Blue River Blue
River Common Stock outstanding immediately prior to the Effective Time and held
by a Blue River Dissenting Shareholder who does not, after the Effective Time,
timely take all additional actions required by IC 23-1-44-13 in order to be
eligible to demand payment with respect to such holder's Blue River Common Stock
shall, as of the date of such failure to have taken such actions on a timely
basis, be deemed to have voted in favor of the Company Merger and accordingly no
longer to be a Blue River Dissenting Shareholder.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF HEARTLAND
In connection with the execution of this Agreement, Heartland has
delivered to Blue River a schedule (the "Disclosure Schedule") setting forth,
among other things, items the disclosure of which is necessary or appropriate
either in response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more representations or warranties contained
in this Section 4 or to one or more of its covenants contained in Section 6;
provided, that the mere inclusion of an item in the Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by
Heartland that such item represents a material exception of fact, event or
circumstance or that such item is reasonably likely to result in a Material
Adverse Effect as to Heartland (as defined below).
For the purpose of this Agreement, and in relation to Heartland and
Heartland Bank, a "Material Adverse Effect" means any effect that (i) is
material and adverse to the financial position, properties, assets, liabilities,
results of operations, liquidity, or business and future prospects of Heartland
and Heartland Bank, as a consolidated whole, as they existed as of the date of
this Agreement, or (ii) would materially impair the ability of Heartland or
Heartland Bank to perform its obligations under this Agreement or under any the
Heartland Option Agreement or otherwise materially threaten or materially impede
the consummation of the Mergers and the other transactions contemplated by this
Agreement; provided however, that Material Adverse Effect shall not be deemed to
include the impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally accepted accounting principles ("GAAP") or regulatory
accounting requirements applicable to banks or savings associations and their
holding companies generally, (c) any modifications or changes to valuation
policies and practices in connection with the Mergers, or restructuring charges
taken in connection with the Mergers, in each case in accordance with GAAP, (d)
effects of any action taken with the prior written consent of Blue River, (e)
changes in general levels of interest rates or conditions or circumstances that
affect the banking industry, generally, and (f) commencement of a new war or an
escalation of current wars, armed hostilities or terrorism directly or
indirectly involving the United States of America.
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No representation or warranty of Heartland and Heartland Bank contained in
this Section 4, except Section 4.03, which shall not be subject to a materiality
standard shall be deemed untrue, incomplete or incorrect, and neither Heartland
nor Heartland Bank shall be deemed to have breached any such specified
representation or warranty, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in this Section 4, has had or is reasonably
likely to have a Material Adverse Effect on Heartland or Heartland Bank (the
"Heartland Disclosure Standard").
Accordingly, Heartland and Heartland Bank hereby represent and warrant to
Blue River, as of the date hereof and as of the Effective Time (subject to the
Heartland Disclosure Standard) as follows:
4.01. Organization and Authority.
(a) Heartland is a corporation duly organized, validly existing and in
good standing under the laws of the State of Indiana and is a registered bank
holding company under the BHC Act. Heartland has full power and authority
(corporate and otherwise) to own, operate and lease its properties as presently
owned, operated and leased and to conduct its business in the manner and by the
means utilized as of the date hereof. Heartland has a class of stock registered
pursuant to Section 12, and is subject to the reporting requirements, of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Heartland Bank and
Heartland (IN) Statutory Trust I, a statutory trust created under the
Connecticut Statutory Trust Act (the "Business Trust"), are Heartland's only
direct or indirect subsidiaries, and except as disclosed in the Disclosure
Schedule, Heartland owns no voting stock or equity securities of any other
corporation, partnership, association or other entity.
(b) Heartland Bank is an Indiana chartered bank duly organized, validly
existing and in good standing under the laws of the State of Indiana. Heartland
Bank is subject to primary regulatory supervision and examination by the Indiana
Department of Financial Institutions ("DFI"). Heartland Bank has full power and
authority (corporate and otherwise) to own, operate and lease its properties as
presently owned, operated and leased and to conduct its business in the manner
and by the means utilized as of the date hereof. Heartland Bank has no
subsidiaries and owns no voting stock or equity securities of any corporation,
partnership, association or other entity.
(c) Neither Heartland nor Heartland Bank has the right to designate a
director, officer or other management official of (or to consent to changes in
directors, officers or other management officials, or otherwise exercise any
controlling influence over) any for-profit or non-profit corporation,
partnership, limited liability company, joint venture, trust, foundation, or
other entity or association, other than the Heartland subsidiaries.
4.02. Authorization.
(a) Heartland has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder, subject to the
fulfillment of the conditions
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precedent set forth in Section 8.02(f) and (h) hereof. Heartland is not aware of
any reason why the approvals set forth in Section 8.02(f) will not be received
in a timely manner and without the imposition of a condition, restriction or
requirement of the type described in Section 8.02(f). This Agreement, and its
execution and delivery by Heartland, has been duly authorized and approved by
the Board of Directors of Heartland and, assuming due execution and delivery by
Blue River and Shelby County Bank, constitutes a valid and binding obligation of
Heartland, subject to the fulfillment of the conditions precedent set forth in
Section 8.02 hereof, and is enforceable in accordance with its terms, except to
the extent limited by general principles of equity and public policy and by
bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation,
moratorium, readjustment of debt or other laws of general application relating
to or affecting the enforcement of creditors' rights.
(b) Heartland Bank has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder, subject to
the fulfillment of the conditions precedent set forth in Section 8.02(f) and (h)
hereof. Heartland Bank is not aware of any reason why the approvals set forth in
Section 8.02(f) will not be received in a timely manner and without the
imposition of a condition, restriction or requirement of the type described in
Section 8.02(f). This Agreement, and its execution and delivery by Heartland
Bank, has been duly authorized and approved by the Board of Directors of
Heartland Bank and, assuming due execution and delivery by Blue River and Shelby
County Bank, constitutes a valid and binding obligation of Heartland Bank,
subject to the fulfillment of the conditions precedent set forth in Section 8.02
hereof, and is enforceable in accordance with its terms, except to the extent
limited by general principles of equity and public policy and by bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt or other laws of general application relating to or
affecting the enforcement of creditors' rights.
(c) Except as set forth in the Disclosure Schedule, neither the
execution of this Agreement nor consummation of the Mergers contemplated hereby:
(i) conflicts with or violates the organizational documents of either Heartland
or Heartland Bank; (ii) conflicts with or violates any local, state, federal or
foreign law, statute, ordinance, rule or regulation (provided that the approvals
of or filings with applicable government regulatory agencies or authorities
required for consummation of the Mergers are obtained) or any court or
administrative judgment, order, injunction, writ or decree; (iii) conflicts
with, results in a breach of or constitutes a default under any note, bond,
indenture, mortgage, deed of trust, license, lease, contract, agreement,
arrangement, commitment or other instrument to which Heartland or Heartland Bank
is a party or by which Heartland or Heartland Bank is subject or bound; (iv)
results in the creation of or gives any person, corporation or entity the right
to create any lien, charge, claim, encumbrance or security interest, or results
in the creation of any other rights or claims of any other party (other than
Blue River and Shelby County Bank) or any other adverse interest, upon any
right, property or asset of Heartland or Heartland Bank; or (v) terminates or
gives any person, corporation or entity the right to terminate, accelerate,
amend, modify or refuse to perform under any note, bond, indenture, mortgage,
agreement, contract, lease, license, arrangement, deed of trust, commitment or
other instrument to which Heartland or Heartland Bank is bound or with respect
to which Heartland or Heartland Bank is to perform any duties or obligations or
receive any rights or benefits.
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(d) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, or
industry self-regulatory organization (a "Governmental Authority"), is required
by Heartland or Heartland Bank in connection with the execution and delivery of
this Agreement and the Option Agreements by Heartland or Heartland Bank or the
consummation by Heartland or Heartland Bank of the transactions contemplated
hereby and thereby, the failure to make or obtain which would have a material
adverse effect on Heartland or Heartland Bank, except for (A) the filing with
the SEC of such reports under Sections 13(d) and 15(d) of the Exchange Act as
may be required in connection with this Agreement, the Option Agreements and the
transactions contemplated hereby and thereby, (B) such applications, filings,
authorizations, orders and approvals as may be required under the banking laws
of Indiana with respect to the Bank Merger, (C) the filing of an application
with the Federal Deposit Insurance Corporation under the Bank Merger Act with
respect to the Bank Merger and the approval thereof, and (D) the filing of
Articles of Merger with respect to the Bank Merger with the Indiana Department
of Financial Institutions and with the Secretary of State of the State of
Indiana,
(e) Heartland has received an oral opinion of Xxxxxxxx, Xxxxxx &
Partners LLP ("Xxxxxxxx"), to the effect that, as of August __, 2004, the
exchange ratio was fair to the shareholders of Heartland from a financial point
of view.
4.03. Capitalization.
(a) The authorized capital stock of Heartland as of the date hereof
consists of (i) 2,000,000 authorized shares of preferred stock, of which 100,000
are designated as Series A Preferred Shares, no par value, none of which shares
are issued or outstanding, and (ii) 10,000,000 shares of common stock, no par
value per share, with accompanying preferred share purchase rights ("Rights")
issued pursuant to the Rights Agreement between Heartland and Heartland Bank
dated as of June 23, 2000 (the "Rights Agreement"), of which 1,394,172 shares
(and accompanying Rights) are issued and outstanding. All of the issued and
outstanding shares of capital stock have been duly and validly authorized by all
necessary corporate action of Heartland, are validly issued, fully paid and
nonassessable and have not been issued in violation of any pre-emptive rights of
any present or former Heartland shareholder. An additional 211,544 shares of
Heartland Common Stock are subject to issuance upon the exercise of the
Heartland Stock Options. Heartland has no capital stock authorized, issued or
outstanding other than as described in this Section 4.03(a) and has no intention
or obligation to authorize or issue any other capital stock or any additional
shares of Heartland Common Stock except upon the exercise of Heartland Stock
Options or of the Rights. Any shares issued upon exercise of the Heartland Stock
Options will, upon payment of the exercise price thereof, be validly issued,
fully paid and nonassessable. The Disclosure Schedule sets forth, for each
Heartland Stock Option outstanding, the name of the grantee, the date of the
grant, the type of grant, the status of the grant as an incentive stock option
under Section 422 of the Internal Revenue Code, the number of shares of
Heartland Common Stock subject to options that are exercisable as of the date
hereof and the exercise price per share. The Board of Directors of Heartland has
extended through the date of termination of this Agreement (as it may be amended
from time to time) or the Effective Time of
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the Company Merger the period during which the Rights may be redeemed by
Heartland pursuant to Section 23 of the Rights Agreement.
(b) The authorized capital stock of Heartland Bank as of the date hereof
consists, and at the Effective Time will consist, of 10,000 shares of common
stock, $10.00 par value per share, 10,000 of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as
"Heartland Bank Common Stock"). Such issued and outstanding shares of Heartland
Bank Common Stock have been duly and validly authorized by all necessary
corporate action of Heartland Bank, are issued, fully paid and nonassessable,
and have not been issued in violation of any pre-emptive rights of any present
or former Heartland Bank shareholder. All of the issued and outstanding shares
of Heartland Bank Common Stock are owned by Heartland free and clear of all
liens, pledges, charges, claims, encumbrances, restrictions, security interests,
options and pre-emptive rights and of all other rights or claims of any other
person, corporation or entity with respect thereto. Heartland Bank has no
capital stock authorized, issued or outstanding other than as described in this
Section 4.03(b) and has no intention or obligation to authorize or issue any
other capital stock or any additional shares of Heartland Bank Common Stock.
(c) Other than the Rights and the Heartland Stock Options, there are no
options, warrants, commitments, calls, puts, agreements, understandings,
arrangements or subscription rights relating to any shares of Heartland capital
stock, or any securities convertible into or representing the right to purchase
or otherwise acquire any capital stock or debt securities of Heartland, by which
Heartland is or may become bound. Heartland does not have any outstanding
contractual or other obligation to repurchase, redeem or otherwise acquire any
of the issued and outstanding shares of Heartland Common Stock. To the knowledge
of Heartland and Heartland Bank, there are no voting trusts, voting
arrangements, buy-sell agreements or similar arrangements affecting the capital
stock of either Heartland or Heartland Bank. To the knowledge of Heartland and
Heartland Bank, upon consummation of the Company Merger and the Bank Merger, the
Surviving Corporation shall own and have the power and right to vote all of the
outstanding capital stock of Heartland Bank.
(d) There are no options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to any
shares of capital stock of Heartland Bank, or any securities convertible into or
representing the right to purchase or otherwise acquire any capital stock or
debt securities of Heartland Bank, by which Heartland Bank is or may become
bound. Heartland Bank does not have any outstanding contractual or other
obligation to repurchase, redeem or otherwise acquire any of the issued and
outstanding shares of its common stock.
(e) Except as set forth in the statements on Schedules 13D and 13G that
have been filed by certain persons with the SEC, Heartland has no knowledge of
any person or entity which beneficially owns 5% or more of its outstanding
shares of Heartland Common Stock, within the meaning of the rules of the SEC
promulgated under Section 13(d) of the Exchange Act.
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4.04. Organizational Documents. The Articles of Incorporation and the
By-Laws of Heartland and Heartland Bank, as amended, representing true, accurate
and complete copies of such corporate documents in effect as of the date of this
Agreement, have been delivered to Blue River as part of the Heartland Disclosure
Schedule.
4.05. Compliance with Law.
(a) To the best of Heartland's knowledge, neither Heartland nor
Heartland Bank has engaged in any activity nor taken or omitted to take any
action which has resulted in the violation of any local, state, federal or
foreign law, statute, regulation, rule, ordinance, order, restriction or
requirement, nor are they in violation of any order, injunction, judgment, writ
or decree of any court or government agency or body. Heartland and Heartland
Bank possess and hold all licenses, franchises, permits, certificates and other
authorizations necessary for the continued conduct of their business without
interference or interruption. Heartland's licenses, franchises, permits,
certificates and authorizations are transferable (to the extent required) to
Blue River at the Effective Time without any restrictions or limitations thereon
or the need to obtain any consents of government agencies or other third parties
other than as set forth in this Agreement.
(b) Except as set forth in the Disclosure Schedule, neither Heartland
nor Heartland Bank is a party to any written agreement, consent decree or
memorandum of understanding or similar arrangement with, or a party to any
commitment letter or similar undertaking to, or is subject to any
cease-and-desist or other order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any policies, procedures
or board resolutions at the request of, any federal or state governmental agency
or authority which is charged with the supervision or regulation of financial
institutions or issuers of securities or which is engaged in the insurance of
deposits or the supervision or regulation of Heartland or Heartland Bank
(including, without limitation, the SEC, the DFI, the Federal Reserve Board and
the Federal Deposit Insurance Corporation) (the "Governmental Authorities) which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, its credit or risk management policies or its management,
nor has either Heartland or Heartland Bank been advised by any Governmental
Authority that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such agreement, decree, memorandum
of understanding, extraordinary supervisory letter, commitment letter, order,
directive or similar submission, or any such policy, procedure or board
resolutions. Except as set forth in the Disclosure Schedule, there are no
uncured violations of law, including but not limited to violations with respect
to which refunds or restitutions may be required, that have been cited in any
examination report of Heartland or Heartland Bank as a result of an examination
by any regulatory agency or body, or set forth in any accountant's or auditor's
report to Heartland or Heartland Bank.
4.06. Litigation and Pending Proceedings.
(a) Except as set forth in the Disclosure Schedule and lawsuits
involving collection of delinquent accounts as to which no counterclaims are
asserted against Heartland or Heartland
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Bank, there are no claims, actions, suits, proceedings, mediations, arbitrations
or investigations pending (or, to the knowledge of Heartland or Heartland Bank,
threatened) in any court or before any government agency or authority,
arbitration panel or otherwise (nor does Heartland Bank have any knowledge of a
reasonable basis for any claim, action, suit, proceeding, litigation,
arbitration, or investigation) against, by or affecting Heartland or Heartland
Bank, including but not limited to those which, if successful, would prevent the
performance of this Agreement, declare the same unlawful or cause the rescission
hereof.
(b) Except as set forth in the Disclosure Schedule, neither Heartland
nor Heartland Bank is: (i) subject to any outstanding judgment, order, writ,
injunction or decree of any court, arbitration panel or governmental agency or
authority; (ii) presently charged with or, to the knowledge of Heartland or
Heartland Bank, under governmental investigation with respect to any actual or
alleged violations of any law, statute, rule, regulation or ordinance; or (iii)
the subject of any pending or, to the knowledge of Heartland or Heartland Bank,
threatened proceeding by any government regulatory agency or authority having
jurisdiction over its respective business, assets, capital, properties or
operations.
4.07. Financial Statements and Reports.
(a) The consolidated financial statements of Heartland that have been
included in Heartland's Annual Report on Form 10-KSB for its fiscal year ended
December 31, 2003 and its Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 2004 and June 30, 2004 (the "Heartland Financial Statements")
present fairly the consolidated financial position, results of operations, and
cash flows of Heartland as of and for the periods covered thereby in conformance
with accounting principles generally accepted in the United States applied on a
consistent basis.
4.08. Properties, Contracts, and Agreements.
(a) Set forth in the Disclosure Schedule are:
(i) A brief description and the location of all real
property owned by Heartland and Heartland Bank and the
principal buildings and structures located thereon and
each lease of real property to which Heartland or
Heartland Bank is a party, identifying the parties
thereto, the annual rental payable, the expiration date
of the lease and a brief description of the property
covered; and
(ii) a list of any agreements, contracts, leases, licenses,
lines of credit, understandings, commitments or
obligations of Heartland or Heartland Bank which
individually:
(A) involve payment or receipt by Heartland or
Heartland Bank (other than as disbursements of
loan proceeds to customers, loan payments by
customers or customer deposits) of more than
$25,000; or
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(B) involve payments based on profits of Heartland or
Heartland Bank; or
(C) relate to the purchase of goods, products,
supplies or services in excess of $25,000; or
(D) were not made in the ordinary course of business;
or
(E) may not be terminated without penalty within one
(1) year from the date of this Agreement.
(b) Each of the agreements, contracts, commitments, leases, instruments
and documents listed in the Disclosure Schedule relating to this Section 4.08 is
valid and enforceable in accordance with its terms, except to the extent limited
by general principles of equity and public policy or by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer, readjustment of debt or other
laws of general application relative to or affecting the enforcement of
creditors' rights, whether now or hereafter in effect, and except that equitable
principles may limit the right to obtain specific performance and other
equitable remedies, and Heartland and Heartland Bank and, to the knowledge of
Heartland and Heartland Bank, all other parties thereto are in compliance with
the provisions thereof, and neither Heartland nor Heartland Bank is in default
in the performance, observance or fulfillment of any obligation, covenant or
provision contained therein.
(c) Except as set forth in the Disclosure Schedule, none of the
agreements, contracts, commitments, leases, instruments and documents listed in
the Disclosure Schedule relating to this Section 4.08 requires the consent of
any party to its assignment in connection with the Mergers contemplated by this
Agreement.
(d) Neither Heartland nor Heartland Bank is, to the knowledge of
Heartland or Heartland Bank, in default under or in breach of, or alleged to be
in default under or in breach of, any loan or credit agreement, conditional
sales contract or other title retention agreement, security agreement, bond,
indenture, mortgage, license, contract, lease, commitment or any other
instrument or obligation.
4.09. Absence of Undisclosed Liabilities. Except for (A) those liabilities
that are fully reflected or reserved for in the consolidated financial
statements of Heartland included in its Quarterly Report on Form 10-QSB for the
fiscal quarter ended June 30, 2004, as filed with the SEC prior to the date of
this Agreement, (B) liabilities incurred since June 30, 2004 in the ordinary
course of business consistent with past practice, and (C) liabilities which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect upon Heartland, Heartland and Heartland Bank do not
have, and since June 30, 2004, Heartland and Heartland Bank have not incurred
(except as permitted by this Agreement), any liabilities or obligations of any
nature whatsoever (whether accrued, absolute, contingent or otherwise and
whether or not required to be reflected in Heartland's financial statements in
accordance with generally accepted accounting principles).
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4.10. Title to Assets.
(a) Except as described in this Section 4.10, Heartland or Heartland
Bank, as the case may be, has good and marketable title in fee simple absolute
to all real property (including, without limitation, all real property used as
bank premises and all other real estate owned) which is reflected as assets in
the Heartland Financial Statements as of June 30, 2004, good title to all
personal property reflected in the Heartland Financial Statements as assets as
of June 30, 2004, other than personal property disposed of in the ordinary
course of business since June 30, 2004, good title to or right to use by valid
and enforceable lease or contract all other properties and assets (whether real
or personal, tangible or intangible) which Heartland or Heartland Bank purports
to own or which Heartland or Heartland Bank uses in its respective business;
good title to, or right to use by terms of a valid and enforceable lease or
contract, all other property used in their respective businesses; and good title
to all property and assets acquired and not disposed of or leased since June 30,
2004. All of such properties and assets are owned by Heartland or Heartland Bank
free and clear of all land or conditional sales contracts, mortgages, liens,
pledges, restrictions, security interests, charges, claims, rights of third
parties or encumbrances of any nature except: (i) as set forth in the Disclosure
Schedule; (ii) as specifically noted in the Heartland Financial Statements;
(iii) statutory liens for taxes not yet delinquent or being contested in good
faith by appropriate proceedings; (iv) pledges or liens required to be granted
in connection with the acceptance of government deposits or granted in
connection with repurchase or reverse repurchase agreements; and (v) easements,
encumbrances and liens of record, imperfections of title and other limitations
which are not material in amount to Heartland on a consolidated basis and which
do not materially detract from the value or materially interfere with the
present or contemplated use of any of the properties subject thereto or impair
the use thereof for the purposes for which they are held or used. All real
property owned or leased by Heartland or Heartland Bank is in compliance with
all applicable zoning and land use laws.
(b) All real property, machinery, equipment, furniture and fixtures
owned or leased by Heartland or Heartland Bank is structurally sound, in good
operating condition and has been and is being maintained and repaired in the
ordinary course of business in all material respects.
4.11. Employee Benefit Plans.
(a) Heartland's Disclosure Schedule contains a complete list of all
bonus, vacation, deferred compensation, commission-based compensation, pension,
retirement, profit sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock appreciation and stock option
plans, all employment or severance contracts, all medical, dental, disability,
severance, health and life insurance plans, all other employee benefit and
fringe benefit plans, contracts or arrangements and any "change of control" or
similar provisions in any plan, contract or arrangement maintained or
contributed to by Heartland or Heartland Bank for the benefit of current or
former officers, employees or directors or the beneficiaries or dependents of
any of the foregoing (collectively, "Compensation Plans").
(b) With respect to each Compensation Plan, if applicable, Heartland has
provided or made available to Blue River, at Blue River's request, true and
complete copies of existing: (A)
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Compensation Plan documents and amendments thereto; (B) trust instruments and
insurance contracts; (C) the most recent Form 5500 filed with the Internal
Revenue Service ("IRS"); (D) the most recent actuarial report and financial
statement; (E) the most recent summary plan description; (F) forms filed with
the PBGC (other than for premium payments); (G) the most recent determination
letter issued by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; and
(I) the most recent nondiscrimination tests performed under the Internal Revenue
Code of 1986, as amended (the "Code") (including 401(k) and 401(m) tests).
(c) Except as set forth in the Disclosure Schedule: (i) each of the
Compensation Plans has been administered and operated in all material respects
in accordance with the terms thereof and with applicable law, including ERISA,
the Code and the Securities Act of 1933, as amended (the "Securities Act"); (ii)
neither Heartland, Heartland Bank nor any other person for whom indemnification
by Heartland or Heartland Bank could apply ("Indemnified Person") has incurred
or is likely to incur fiduciary liability under Title I of ERISA with respect to
any Compensation Plan; (iii) each of the Compensation Plans which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS which
reflects all law changes for which a determination may be received, or an
application for such a letter is pending with the IRS, and Heartland is not
aware of any circumstances that would likely result in the revocation or denial
of any such favorable determination letter; (iv) none of Heartland, Heartland
Bank or an Indemnified Person has engaged in any transaction or taken any action
with respect to any Compensation Plan that has subjected, or could, to
Heartland's knowledge, subject Heartland or Heartland Bank or any Indemnified
Person to a tax or penalty imposed by either Section 4975 of the Code or Section
502 of ERISA; and (v) there is no pending or, to Heartland's knowledge,
threatened litigation or governmental audit, examination or investigation
relating to Heartland's Compensation Plans.
(d) None of the Compensation Plans is a plan, and neither of Heartland
nor Heartland Bank ever have maintained or made any contributions to any plan,
that is subject to Part 3 of Title I of ERISA, Title IV of ERISA or Section 412
of the Code. No Compensation Plan is a "multiemployer plan" within the meaning
of Section 3(37) or 4001(a)(3) of ERISA or a "multiple employer plan" within the
meaning of Section 4064 of ERISA or Section 413(c) of the Code. Neither
Heartland nor Heartland Bank has any current or potential liability or
obligation, whether direct or indirect, with respect to any multiemployer or
multiple employer plan.
(e) Except as set forth in the Disclosure Schedule or as otherwise
provided for in this Agreement, no Compensation Plan provides benefits,
including death or medical benefits, with respect to any employees or former
employees of Heartland or Heartland Bank (or their spouses, beneficiaries, or
dependents) beyond the retirement or other termination of service of any such
employee other than (A) coverage mandated by Part 6 of Title I of ERISA or
Section 4980B of the Code, (B) retirement or death benefits under any Pension
Plan, (C) disability benefits under any Compensation Plan which is an employee
welfare benefit plan (as defined under Section 3(1) of ERISA) that have been
fully provided for by insurance or otherwise, (D) benefits in the nature of
severance pay under any Compensation Plan, or (E) miscellaneous other
post-employment benefits not exceeding $10,000 in the aggregate. Except as set
forth in the
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Disclosure Schedule or as otherwise provided for in this Agreement, Heartland
and Heartland Bank may amend or terminate any health plan which provides
post-retirement or termination of employment benefits at any time without
incurring any liability thereunder. Except as set forth in the Disclosure
Schedule, there has been no communication to employees, former employees or
their spouses, beneficiaries or dependents by Heartland or Heartland Bank that
promised or guaranteed such employees retiree health or life insurance or other
retiree death benefits on a permanent basis or promised or guaranteed that any
such benefits could not be modified, eliminated or terminated.
(f) Except as set forth in the Disclosure Schedule or as otherwise
provided for in this Agreement, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
including, without limitation, any termination of employment relating thereto
and occurring prior to, at or following the Effective Time, will (A) result in
any increase in compensation or any payment (including, without limitation,
severance, golden parachute or otherwise) becoming due to any current or former
director, officer or employee of Heartland or Heartland Bank under any
Compensation Plan or otherwise from Heartland or Heartland Bank, (B) increase
any benefits otherwise payable under any Compensation Plan, or (C) result in any
acceleration of the time of payment, funding or vesting of any such benefit;
provided, however, that effects described in (A), (B) or (C), the aggregate
compensation and benefit cost impact of which, actuarially determined as of the
Effective Time, do not exceed $10,000, shall not be deemed to violate the
representations made in this Section 4.11(f).
(g) Except as set forth in the Disclosure Schedule: (i) neither
Heartland nor Heartland Bank maintains any compensation plans, programs or
arrangements the payments under which are, or reasonably would be expected to
be, non-deductible as a result of the limitations under Section 162(m) of the
Code and the regulations issued thereunder; and (ii) none of Heartland, the
Surviving Corporation or any of their respective subsidiaries will be obligated
to make a payment as a result, directly or indirectly, of the transactions
contemplated by this Agreement that reasonably would be expected to be
non-deductible as a result of the limitations under Section 162(m) of the Code
and the regulations issued thereunder.
4.12. Labor Matters. Neither Heartland nor Heartland Bank is a party to or
is bound by any collective bargaining contract or understanding with a labor
union or labor organization, nor is Heartland or Heartland Bank the subject of a
proceeding asserting that it has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel Heartland or
Heartland Bank to bargain with any labor organization as to wages or conditions
of employment, nor is there any strike or other labor dispute involving it or
Heartland Bank pending or, to Heartland's knowledge, threatened, nor is
Heartland aware of any activity involving it or Heartland Bank employees seeking
to certify a collective bargaining unit or engaging in other organizational
activity.
4.13. Environmental Matters. Except as set forth in the Disclosure
Schedule, (i) to Heartland's knowledge, Heartland and Heartland Bank have
complied in all material respects at all times with applicable Environmental
Laws (as defined below); (ii) to Heartland's knowledge, no property (including
buildings and any other structures) currently or formerly owned or
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operated by Heartland or Heartland Bank has been contaminated with, or has had
any release of, any Hazardous Substance (as defined below); (iii) to Heartland's
knowledge, neither Heartland nor Heartland Bank would reasonably be expected to
be ruled to have caused or contributed to any contamination as the owner or
operator under any Environmental Law of any property in which it has currently
or formerly held a lien; (iv) to Heartland's knowledge, neither Heartland nor
Heartland Bank is subject to liability for any Hazardous Substance disposal or
contamination on any other third-party property; (v) neither Heartland nor
Heartland Bank has received any notice, demand letter, claim or request for
information alleging any violation of, or liability under, any Environmental
Law; (vi) neither Heartland nor Heartland Bank is subject to any order, decree,
injunction or other agreement with any federal or state governmental authority
or any third party relating to any Environmental Law; (vii) to Heartland's
knowledge, there are no circumstances or conditions involving Heartland or
Heartland Bank or any currently or formerly owned or operated property
(including the presence of asbestos, underground storage tanks, lead products,
polychlorinated biphenyls or gas station sites) that could result in any claims,
liability or investigations or result in any restrictions on the ownership, use,
or transfer of any property pursuant to any Environmental Law; and (viii)
Heartland has delivered to Blue River copies of all environmental reports,
studies, sampling data, correspondence, filings and other environmental
information in its possession or reasonably available to it relating to
Heartland, Heartland Bank, any currently or formerly owned or operated property
or any property in which Heartland or Heartland Bank has held a lien.
As used in this Agreement, "Environmental Laws" means any federal, state
or local law, regulation, order, decree, permit, authorization, common law or
agency requirement with force of law relating to: (i) the protection or
restoration of the environment, health or safety (in each case as relating to
the environment) or natural resources; or (ii) the handling, use, presence,
disposal, release or threatened release of any Hazardous Substance. As used in
this Agreement, "Hazardous Substance" means: (i) any substance in any
concentration that is listed, classified or regulated pursuant to any
Environmental Law; (ii) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (iii) any other substance which is or may be
the subject of regulatory action by any federal, state or local governmental
authority pursuant to any Environmental Law.
4.14. Tax Matters. (i) All returns, declarations, reports, estimates,
information returns and statements required to be filed on or before the
Effective Time under any federal, state, local or foreign tax laws ("Tax
Returns") with respect to Heartland or Heartland Bank, have been or will be
timely filed, or requests for extensions have been timely filed and have not
expired; (ii) all Tax Returns that have been filed by Heartland and Heartland
Bank since 1997 are complete and accurate in all respects; (iii) all taxes shown
to be due and payable (without regard to whether such taxes have been assessed)
on such Tax Returns (or, with respect to Tax Returns for which an extension has
been timely filed, will be required to be shown as due and payable when such Tax
Returns are filed) have been paid or adequate reserves have been established for
the payment of such taxes; (iv) no audit or examination or refund litigation
with respect to any Tax Return is pending or, to Heartland's knowledge, has been
threatened; (v) all deficiencies asserted or assessments made as a result of any
examination of a Tax Return of Heartland or Heartland
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Bank have been paid in full; (vi) no waivers of statutes of limitation have been
given by or requested with respect to any taxes of Heartland or Heartland Bank;
(vii) Heartland and Heartland Bank have never been a member of an affiliated,
combined, consolidated or unitary tax group for purposes of filing any Tax
Return (other than a consolidated group of which Heartland was the common
parent); (viii) no closing agreements, private letter rulings, technical advice
memoranda or similar agreement or rulings have been entered into or issued by
any taxing authority with respect to Heartland or Heartland Bank; (ix) no tax is
required to be withheld pursuant to Section 1445 of the Code as a result of the
transactions contemplated by this Agreement; (x) Heartland and Heartland Bank
are not bound by any tax indemnity, tax sharing or tax allocation agreement or
arrangement; and (xi) Heartland and Heartland Bank have withheld and paid all
taxes that they are required to withhold from compensation income of their
employees.
4.15. Risk Management. Except as set forth in the Disclosure Schedule,
Heartland and Heartland Bank are not parties to any swaps, caps, floors, option
agreements, futures and forward contracts and other similar financial risk
management arrangements, whether entered into for Heartland's own account, or
for the account of Heartland Bank or its customers.
4.16. Books and Records. The books and records of Heartland and Heartland
Bank have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein.
4.17. Loans.
(a) Except as set forth in the Disclosure Schedule, there is no loan by
Heartland Bank which was included in the Heartland Financial Statements as of
June 30, 2004 or which has been made or acquired since June 30, 2004, in excess
of $25,000 that has been classified by Heartland Bank's regulators or management
as "Other Loans Specially Mentioned," "Substandard," "Doubtful" or "Loss" or
that has been identified by accountants or auditors (internal or external) as
having a significant risk of uncollectability. The most recent loan watch list
of Heartland Bank, and a list of all loans in excess of $25,000 which Heartland
Bank, has determined to be thirty (30) days or more past due with respect to
principal or interest payments or has placed on nonaccrual status, have been
provided to Blue River.
(b) All loans reflected in the Heartland Financial Statements as of June
30, 2004 and which have been made, extended, renewed, restructured, approved,
amended or acquired since June 30, 2004: (i) to the knowledge of Heartland and
Heartland Bank, constitute the legal, valid and binding obligation of the
obligor and any guarantor named therein, except to the extent limited by general
principles of equity and public policy or by bankruptcy, insolvency, fraudulent
transfer, reorganization, liquidation, moratorium, readjustment of debt or other
laws of general application relative to or affecting the enforcement of
creditors' rights; (ii) are evidenced by notes, instruments or other evidences
of indebtedness which are true, genuine and what they purport to be; and (iii)
are secured, to the extent that Heartland or Heartland Bank has a security
interest in collateral or a mortgage securing such loans, by perfected security
interests or recorded mortgages naming Heartland or Heartland Bank as the
secured party or mortgagee.
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(c) The allowance for possible loan losses shown on the Heartland
Financial Statements are adequate in all respects under the requirements of GAAP
applied on a consistent basis to provide for which reserves were made, on loans
and leases outstanding and real estate owned as of the respective dates.
4.18. Shareholder Rights Plan.
(a) Except as otherwise provided in this Agreement, the Disclosure
Schedule and Heartland's Articles of Incorporation and By-Laws, Heartland has no
shareholder rights plan or any other plan, program or agreement involving,
restricting, prohibiting or discouraging a change in control or merger of
Heartland or which may be considered an anti-takeover mechanism.
(b) Subject to the redemption of the Rights as contemplated by Section
6.13, Heartland has taken all action necessary or appropriate so that entering
into this Agreement and the Heartland Option Agreement, and the consummation of
the transactions hereby and thereby, do not and will not result in the ability
of any person to exercise any of the Rights or to enable or require the Rights
to separate from the Heartland Common Stock to which they are attached, or to be
triggered or become exercisable.
4.19. Deposit Insurance. The deposits of Heartland Bank are insured by the
FDIC in accordance with the Federal Deposit Insurance Act, of 1950, as amended
(the "FDIA"), and Heartland or Heartland Bank respectively, have paid or
properly reserved or accrued for all current premiums and assessments with
respect to such deposit insurance.
4.20. Insurance. Set forth in the Disclosure Schedule is a list and brief
description of all policies of insurance (including, without limitation,
bankers' blanket bond, directors' and officers' liability insurance, property
and casualty insurance, group health or hospitalization insurance and insurance
providing benefits for employees) owned or held by Heartland or Heartland Bank
on the date hereof or with respect to which Heartland or Heartland Bank pays any
premiums. Each such policy is in full force and effect and all premiums due
thereon have been paid when due, and a true, accurate and complete copy thereof
has been made available to Blue River prior to the date hereof.
4.21. Broker's, Finder's or Other Fees. Except for reasonable fees of
Heartland's attorneys, accountants, employee benefits consultants and investment
bankers, no agent, broker or other person acting on behalf of Heartland or
Heartland Bank or under any authority of Heartland or Heartland Bank is or shall
be entitled to any commission, broker's or finder's fee or any other form of
compensation or payment from any of the parties hereto relating to this
Agreement and the Mergers contemplated hereby. No action has been taken by
Heartland that would give rise to any valid claim against any party hereto for a
brokerage commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, excluding a fee to be paid by
Heartland to Xxxxxxxx in an amount and on terms set forth in the Disclosure
Schedule.
4.22. Interim Events.
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(a) Except as set forth in the Disclosure Schedule, since June 30, 2004,
no event has occurred and no fact or circumstance shall have come to exist
which, directly or indirectly, individually or taken together with all other
facts, circumstances and events, has had, or is reasonably likely to have, a
Material Adverse Effect.
(b) Except as set forth in the Disclosure Schedule and except for the
activities in connection with the Mergers, since June 30, 2004, Heartland and
Heartland Bank have carried on their respective businesses in the ordinary and
usual course consistent with their respective past practices and there has not
been:
(i) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock
or property) with respect to Heartland Common Stock; or
(ii) any split, combination or reclassification of any
capital stock of Heartland or Heartland Bank or any
issuance or the authorization of any issuance of any
other securities in respect of, or in lieu of or in
substitution for shares of Heartland Common Stock,
except for issuances of Heartland Common Stock upon the
exercise of options awarded prior to the date hereof in
accordance with the terms of the Heartland Stock Option
Plans.
4.23. Regulatory Filings. Heartland and Heartland Bank respectively, have
since January 1, 2003, filed (or furnished) in a timely manner all documents
require to be filed with (or furnished to) all appropriate federal and state
regulatory agencies and authorities as required by applicable law including, but
not limited to, all reports on Form 8-K, Form 10-KSB and Form 10-QSB and proxy
statements and annual reports required to be filed by Heartland with (or
furnished to) the SEC. All documents filed with (or furnished to) the SEC and
all other appropriate federal and state regulatory agencies were true, accurate
and complete and have complied as to form with the applicable requirements. No
such document contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements made therein, at
the time and in light of the circumstances under which they were made, not false
or misleading.
4.24. Indemnification Agreements.
(a) Neither Heartland nor Heartland Bank is a party to any
indemnification, indemnity or reimbursement agreement, contract, commitment or
understanding to indemnify any present or former director, officer, employee,
shareholder or agent against liability or hold the same harmless from liability
other than as expressly provided in the Articles of Incorporation or the By-Laws
of Heartland and Heartland Bank.
(b) No claims have been made against or filed with Heartland or
Heartland Bank nor have, to the knowledge of Heartland, any claims been
threatened against Heartland or Heartland Bank for indemnification against
liability or for reimbursement of any costs or expenses incurred
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in connection with any legal or regulatory proceeding by any present or former
director, officer, shareholder, employee or agent of Heartland or Heartland
Bank.
4.25. Shareholder Approval. The affirmative vote of the holders of a
majority of the shares of Heartland Common Stock (which are issued and
outstanding on the record date relating to the meeting of shareholders) is
required for shareholder approval of this Agreement and the Company Merger.
4.26. CRA Rating. Except as set forth in the Disclosure Schedule,
Heartland Bank was rated "Satisfactory" or "Outstanding" following its most
recent Community Reinvestment Act examination by the regulatory agency
responsible for its supervision. The Bank has received no notice of and has no
knowledge of any planned or threatened objection by any community group to the
transactions contemplated hereby.
4.27. Capital Requirements.
(a) Heartland Bank is (i) at least "well capitalized", as defined for
purposes of the FDIA, and (ii) in compliance with all capital requirements,
standards and ratios required by each state or federal bank regulator with
jurisdiction over Heartland Bank.
(b) Heartland is in compliance with all capital requirements, standards
and ratios required by each state or federal regulator with jurisdiction over
Heartland.
4.28. Accuracy of Statements Made and Materials Provided to Blue River.
(a) No representation, warranty in this Section 4 or other statement
made, or any information provided, by Heartland or Heartland Bank in this
Agreement or the Disclosure Schedule (and any update thereto), and no written
report, statement, list, certificate, materials or other written information
furnished or to be furnished by Heartland or Heartland Bank to Blue River
through and including the Effective Time in connection with this Agreement or
the Mergers contemplated hereby (including, without limitation, any written
information which has been or shall be supplied by Heartland or Heartland Bank
with respect to their respective financial condition, results of operations,
business, assets, capital or directors and officers for inclusion in the proxy
statement-prospectus and registration statement relating to the Company Merger),
contains or shall contain (in the case of information relating to the proxy
statement-prospectus at the time it is mailed to Heartland's shareholders) any
untrue statement of material fact or omits or shall omit to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made and in light of the total mix of
information known to Blue River, not false or misleading.
(b) The Disclosure Schedule contains, to the knowledge of Heartland and
Heartland Bank, any and all exceptions to one or more of the representations and
warranties contained in this Section 4 or to one or more of the covenants of
Heartland contained in Section 6 hereof, regardless of the materiality of the
facts, circumstances or events relating to such exception or whether such
exception constitutes a Material Adverse Effect.
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SECTION 5
REPRESENTATIONS AND WARRANTIES OF BLUE RIVER
AND SHELBY COUNTY BANK
In connection with the execution of this Agreement, Blue River has
delivered to Heartland a schedule (the "Blue River Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more representations or
warranties contained in this Section 5 or to one or more of its covenants
contained in Section 7; provided, that the mere inclusion of an item in the Blue
River Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by Blue River that such item represents a material
exception of fact, event or circumstance or that such item is reasonably likely
to result in a Material Adverse Effect as to Blue River (as defined below).
For the purpose of this Agreement, and in relation to Blue River and the
Blue River Subsidiaries, a "Material Adverse Effect" means any effect that (i)
is material and adverse to the financial position, properties, assets,
liabilities, results of operations, liquidity, or business and future prospects
of Blue River and the Blue River Subsidiaries, as a consolidated whole, as they
existed as of the date of this Agreement, or (ii) would materially impair the
ability of Blue River or the Blue River Subsidiaries to perform its obligations
under this Agreement or under any the Blue River Option Agreement or otherwise
materially threaten or materially impede the consummation of the Mergers and the
other transactions contemplated by this Agreement; provided however, that
Material Adverse Effect on Blue River and the Blue River Subsidiaries shall not
be deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting requirements
applicable to banks or savings associations and their holding companies
generally, (c) any modifications or changes to valuation policies and practices
in connection with the Mergers, or restructuring charges taken in connection
with the Mergers, in each case in accordance with GAAP, (d) effects of any
action taken with the prior written consent of Heartland, (e) changes in general
levels of interest rates or conditions or circumstances that affect the banking
industry, generally, and (f) commencement of a new war or an escalation of
current wars, armed hostilities or terrorism directly or indirectly involving
the United States of America.
No representation or warranty of Blue River and Shelby County Bank
contained in this Section 5, except Section 5.03, which shall not be subject to
a materiality standard shall be deemed untrue, incomplete or incorrect, and
neither Blue River nor Shelby County Bank shall be deemed to have breached any
such specified representation or warranty, as a consequence of the existence of
any fact, event or circumstance unless such fact, circumstance or event,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty contained in this Section 5,
has had or is reasonably likely to have a Material Adverse Effect on Blue River
or the Blue River Subsidiaries (the "Blue River Disclosure Standard").
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Accordingly, Blue River and Shelby County Bank hereby represent and
warrant to Heartland, as of the date hereof and as of the Effective Time
(subject to the Blue River Disclosure Standard), as follows:
5.01. Organization and Authority.
(a) Blue River is a corporation duly organized, validly existing and in
good standing under the laws of the State of Indiana and is a registered savings
and loan holding company under HOLA. Blue River has full power and authority
(corporate and otherwise) to own, operate and lease its properties as presently
owned, operated and leased and to conduct its business in the manner and by the
means utilized as of the date hereof. Blue River has a class of stock registered
pursuant to Section 12, and is subject to the reporting requirements, of the
1934 Act. Except as set forth in the Blue River Disclosure Schedule, the Blue
River Subsidiaries are Blue River's only direct or indirect subsidiaries, and
except as disclosed in the Blue River Disclosure Schedule, Blue River owns no
voting stock or equity securities of any other corporation, partnership,
association or other entity.
(b) Shelby County Bank is a federal savings association duly organized,
validly existing and in good standing under the laws of the United States of
America. Shelby County Bank is subject to primary regulatory supervision and
examination by the Office of Thrift Supervision (the "OTS"). Shelby County Bank
has full power and authority (corporate and otherwise) to own, operate and lease
its properties as presently owned, operated and leased and to conduct its
business in the manner and by the means utilized as of the date hereof. Shelby
County Bank has no subsidiaries and owns no voting stock or equity securities of
any corporation, partnership, association or other entity.
(c) Unified is a federal savings association duly organized, validly
existing and in good standing under the laws of the United States of America.
Unified is subject to primary regulatory supervision and examination by the
Office of Thrift Supervision ("OTS"). Unified has full power and authority
(corporate and otherwise) to own, operate and lease its properties as presently
owned, operated and leased and to conduct its business in the manner and by the
means utilized as of the date hereof. Unified has no subsidiaries and owns no
voting stock or equity securities of any corporation, partnership, association
or other entity.
(d) Except as set forth in the Blue River Disclosure Schedule neither
Blue River nor the Blue River Subsidiaries has the right to designate a
director, officer or other management official of (or to consent to changes in
directors, officers or other management officials, or otherwise exercise any
controlling influence over) any for-profit or non-profit corporation,
partnership, limited liability company, joint venture, trust, foundation, or
other entity or association, other than the Blue River subsidiaries.
5.02. Authorization.
(a) Blue River has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder, subject to the
fulfillment of the conditions precedent set forth in Section 8.01(f) and (i)
hereof. Blue River is not aware of any reason why
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the approvals set forth in Section 8.01(f) will not be received in a timely
manner and without the imposition of a condition, restriction or requirement of
the type described in Section 8.01(f). This Agreement, and its execution and
delivery by Blue River, has been duly authorized and approved by the Board of
Directors of Blue River and, assuming due execution and delivery by Heartland
and Heartland Bank, constitutes a valid and binding obligation of Blue River,
subject to the fulfillment of the conditions precedent set forth in Section 8.01
hereof, and is enforceable in accordance with its terms, except to the extent
limited by general principles of equity and public policy and by bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt or other laws of general application relating to or
affecting the enforcement of creditors' rights.
(b) Shelby County Bank has the requisite corporate power and authority
to enter into this Agreement and to perform its obligations hereunder, subject
to the fulfillment of the conditions precedent set forth in Section 8.01(f) and
(i) hereof. Shelby County Bank is not aware of any reason why the approvals set
forth in Section 8.01(f) will not be received in a timely manner and without the
imposition of a condition, restriction or requirement of the type described in
Section 8.01(f). This Agreement, and its execution and delivery by Shelby County
Bank, has been duly authorized and approved by the Board of Directors of Shelby
County Bank and, assuming due execution and delivery by Heartland and Heartland
Bank, constitutes a valid and binding obligation of Shelby County Bank, subject
to the fulfillment of the conditions precedent set forth in Section 8.01 hereof,
and is enforceable in accordance with its terms, except to the extent limited by
general principles of equity and public policy and by bankruptcy, insolvency,
fraudulent transfer, reorganization, liquidation, moratorium, readjustment of
debt or other laws of general application relating to or affecting the
enforcement of creditors' rights.
(c) Except as set forth in the Blue River Disclosure Schedule, neither
the execution of this Agreement nor consummation of the Mergers contemplated
hereby: (i) conflicts with or violates the organizational documents of either
Blue River or the Blue River Subsidiaries; (ii) conflicts with or violates any
local, state, federal or foreign law, statute, ordinance, rule or regulation
(provided that the approvals of or filings with applicable government regulatory
agencies or authorities required for consummation of the Mergers are obtained)
or any court or administrative judgment, order, injunction, writ or decree;
(iii) conflicts with, results in a breach of or constitutes a default under any
note, bond, indenture, mortgage, deed of trust, license, lease, contract,
agreement, arrangement, commitment or other instrument to which Blue River or
the Blue River Subsidiaries is a party or by which Blue River or the Blue River
Subsidiaries is subject or bound; (iv) results in the creation of or gives any
person, corporation or entity the right to create any lien, charge, claim,
encumbrance or security interest, or results in the creation of any other rights
or claims of any other party (other than Heartland and Heartland Bank) or any
other adverse interest, upon any right, property or asset of Blue River or the
Blue River Subsidiaries; or (v) terminates or gives any person, corporation or
entity the right to terminate, accelerate, amend, modify or refuse to perform
under any note, bond, indenture, mortgage, agreement, contract, lease, license,
arrangement, deed of trust, commitment or other instrument to which Blue River
or the Blue River Subsidiaries is bound or with respect to which Blue River or
the Blue River Subsidiaries is to perform any duties or obligations or receive
any rights or benefits.
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(d) No consent, approval, order or authorization of, or registration,
declaration or filing with a Governmental Authority is required by Blue River or
the Blue River Subsidiaries in connection with the execution and delivery of
this Agreement and the Option Agreements by Blue River or Shelby County Bank or
the consummation by Blue River or Shelby County Bank of the transactions
contemplated hereby and thereby, the failure to make or obtain which would have
a material adverse effect on Blue River or Shelby County Bank, except for (A)
the filing with the SEC of such reports under Sections 13(d) and 15(d) of the
Exchange Act as may be required in connection with this Agreement, the Option
Agreements and the transactions contemplated hereby and thereby, (B) such
applications, filings, authorizations, orders and approvals as may be required
under the banking laws of Indiana with respect to the Bank Merger, (C) the
filing of an application with the Federal Deposit Insurance Corporation under
the Bank Merger Act with respect to the Bank Merger and the approval thereof,
and (D) the filing of Articles of Merger with respect to the Bank Merger with
the Indiana Department of Financial Institutions and with the Secretary of State
of the State of Indiana,
(e) Blue River has received an oral opinion of Xxxx Xxxxxx Investments,
Inc. ("Xxxx"), to the effect that, as of August 30, 2004, the consideration to
be received in the Company Merger was fair to the shareholders of Blue River
from a financial point of view.
5.03. Capitalization.
(a) The authorized capital stock of Blue River as of the date hereof
consists, and at the Effective Time will consist, of (i) 2,000,000 shares of
preferred stock, no par value, none of which shares are issued or outstanding,
and (ii) 15,000,000 shares of common stock, no par value per share, of which
3,406,150 shares are issued and outstanding. The shares, have been duly and
validly authorized by all necessary corporate action of Blue River, are validly
issued, fully paid and nonassessable and have not been issued in violation of
any pre-emptive rights of any present or former Blue River shareholder. An
additional 217,350 shares of Blue River Common Stock are subject to issuance
upon the exercise of options (the "Blue River Stock Options") granted under the
1997 Key Employees' Stock Option Plan of Blue River Bancshares, Inc., 2000 Key
Employees' Stock Option Plan of Blue River Bancshares, Inc., 2002 Key Employees'
Stock Option Plan of Blue River Bancshares, Inc., 1997 Directors' Stock Option
Plan of Blue River Bancshares, Inc., or the 2000 Directors' Stock Option Plan of
Blue River Bancshares, Inc. (collectively, the "Blue River Stock Option Plans").
Blue River has no capital stock authorized, issued or outstanding other than as
described in this Section 5.03(a) and has no intention or obligation to
authorize or issue any other capital stock or any additional shares of Blue
River Common Stock except upon the exercise of Blue River Stock Options. Any
shares issued upon exercise of the Blue River Stock Options will be validly
issued, fully paid and nonassessable. The Blue River Disclosure Schedule sets
forth, for each Blue River Stock Option outstanding under the Blue River Stock
Option Plans, the name of the grantee, the date of the grant, the type of grant,
the status of the grant as qualified or non-qualified under Section 422 of the
Internal Revenue Code, the number of shares of Blue River Common Stock subject
to options that are exercisable as of the date hereof and the exercise price per
share.
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(b) The authorized capital stock of Shelby County Bank as of the date
hereof consists, and at the Effective Time will consist, of 1,000 shares of
common stock, $.01 par value, 1,000 of which shares are issued and outstanding
(such issued and outstanding shares are referred to herein as "Shelby County
Bank Common Stock"). Such issued and outstanding shares of Shelby County Bank
Common Stock have been duly and validly authorized by all necessary corporate
action of Shelby County Bank, are issued, fully paid and nonassessable, and have
not been issued in violation of any pre-emptive rights of any present or former
the Blue River Subsidiaries shareholder. Except as set forth in the Blue River
Disclosure Schedule all of the issued and outstanding shares of Shelby County
Bank Common Stock are owned by Blue River free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto. Shelby County Bank has no capital
stock authorized, issued or outstanding other than as described in this Section
5.03(b) and has no intention or obligation to authorize or issue any other
capital stock or any additional shares of Shelby County Bank Common Stock.
(c) The authorized capital stock of Unified as of the date hereof
consists, and at the Effective Time will consist, of 10,000 shares of common
stock, $100 par value, 5,000 of which shares are issued and outstanding (such
issued and outstanding shares are referred to herein as "Unified Common Stock").
Such issued and outstanding shares of Unified Common Stock have been duly and
validly authorized by all necessary corporate action of Unified, are issued,
fully paid and nonassessable, and have not been issued in violation of any
pre-emptive rights of any present or former Unified shareholder. All of the
issued and outstanding shares of Unified are owned by Blue River free and clear
of all liens, pledges, charges, claims, encumbrances, restrictions, security
interests, options and pre-emptive rights and of all other rights or claims of
any other person, corporation or entity with respect thereto. Unified has no
capital stock authorized, issued or outstanding other than as described in this
Section 5.03(c) and has no intention or obligation to authorize or issue any
other capital stock or any additional shares of Unified Common Stock.
(d) Other than the Blue River Stock Option Plans and as set forth in the
Blue River Disclosure Schedule, there are no options, warrants, commitments,
calls, puts, agreements, understandings, arrangements or subscription rights
relating to any shares of Blue River capital stock, or any securities
convertible into or representing the right to purchase or otherwise acquire any
capital stock or debt securities of Blue River, by which Blue River is or may
become bound. Blue River does not have any outstanding contractual or other
obligation to repurchase, redeem or otherwise acquire any of the issued and
outstanding shares of Blue River Common Stock. To the knowledge of Blue River
and the Blue River Subsidiaries, there are no voting trusts, voting
arrangements, buy-sell agreements or similar arrangements affecting the capital
stock of either Blue River or the Blue River Subsidiaries. To the knowledge of
Blue River and the Blue River Subsidiaries, upon consummation of the Company
Merger and the Bank Merger, the Surviving Corporation shall own and have the
power and right to vote all of the outstanding capital stock of the Blue River
Subsidiaries.
(e) There are no options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to any
shares of capital stock of the
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Blue River Subsidiaries, or any securities convertible into or representing the
right to purchase or otherwise acquire any capital stock or debt securities of
the Blue River Subsidiaries, by which the Blue River Subsidiaries is or may
become bound. The Blue River Subsidiaries do not have any outstanding
contractual or other obligation to repurchase, redeem or otherwise acquire any
of the issued and outstanding shares of their respective common stock.
(f) Except as set forth in the statements on Schedules 13D and 13G that
have been filed by certain persons with the SEC, Blue River has no knowledge of
any person or entity which beneficially owns 5% or more of its outstanding
shares of Blue River Common Stock, within the meaning of the rules of the SEC
promulgated under Section 13(d) of the Exchange Act.
5.04. Shares to be issued in the Company Merger. The shares of Blue River
Common Stock to be issued in the Company Merger pursuant to this Agreement will,
at the Effective Time, be duly authorized, and when issued in accordance with
this Agreement, be validly issued, fully paid, and nonassessable.
5.05. Organizational Documents. The Articles of Incorporation or Charter
and the By-Laws of Blue River and the Blue River Subsidiaries, as amended,
representing true, accurate and complete copies of such corporate documents in
effect as of the date of this Agreement, have been delivered to Heartland as
part of the Blue River Disclosure Schedule.
5.06. Compliance with Law.
(a) To the best of Blue River's knowledge, neither Blue River nor the
Blue River Subsidiaries has engaged in any activity nor taken or omitted to take
any action which has resulted in the violation of any local, state, federal or
foreign law, statute, regulation, rule, ordinance, order, restriction or
requirement, nor are they in violation of any order, injunction, judgment, writ
or decree of any court or government agency or body. Blue River and the Blue
River Subsidiaries possess and hold all licenses, franchises, permits,
certificates and other authorizations necessary for the continued conduct of
their business without interference or interruption. Blue River's licenses,
franchises, permits, certificates and authorizations are transferable (to the
extent required) to Heartland or Heartland Bank at the Effective Time without
any restrictions or limitations thereon or the need to obtain any consents of
government agencies or other third parties other than as set forth in this
Agreement.
(b) Except as set forth in the Blue River Disclosure Schedule, neither
Blue River nor the Blue River Subsidiaries is a party to any written agreement,
consent decree or memorandum of understanding or similar arrangement with, or a
party to any commitment letter or similar undertaking to, or is subject to any
cease-and-desist or other order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any policies, procedures
or board resolutions at the request of, any federal or state governmental agency
or authority which is charged with the supervision or regulation of financial
institutions or issuers of securities or which is engaged in the insurance of
deposits or the supervision or regulation of Blue River or the Blue River
Subsidiaries (including, without limitation, the SEC, the OTS and the Federal
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Deposit Insurance Corporation) which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit or risk
management policies or its management, nor has either Blue River or the Blue
River Subsidiaries been advised by any regulatory authority that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such agreement, decree, memorandum of understanding,
extraordinary supervisory letter, commitment letter, order, directive or similar
submission, or any such policy, procedure or board resolutions. Except as set
forth in the Blue River Disclosure Schedule, there are no uncured violations of
law, including but not limited to violations with respect to which refunds or
restitutions may be required, that have been cited in any examination report of
Blue River or the Blue River Subsidiaries as a result of an examination by any
regulatory agency or body, or set forth in any accountant's or auditor's report
to Blue River or the Blue River Subsidiaries.
5.07. Litigation and Pending Proceedings.
(a) Except as set forth in the Blue River Disclosure Schedule and
lawsuits involving collection of delinquent accounts as to which no
counterclaims are asserted against Blue River or the Blue River Subsidiaries,
there are no claims, actions, suits, proceedings, mediations, arbitrations or
investigations pending (or, to the knowledge of Blue River or the Blue River
Subsidiaries, threatened) in any court or before any government agency or
authority, arbitration panel or otherwise (nor does Blue River or the Blue River
Subsidiaries have any knowledge of a reasonable basis for any claim, action,
suit, proceeding, litigation, arbitration, or investigation) against, by or
affecting Blue River or the Blue River Subsidiaries, including but not limited
to those which, if successful, would prevent the performance of this Agreement,
declare the same unlawful or cause the rescission hereof.
(b) Except as set forth in the Blue River Disclosure Schedule, neither
Blue River nor the Blue River Subsidiaries is: (i) subject to any outstanding
judgment, order, writ, injunction or decree of any court, arbitration panel or
governmental agency or authority; (ii) presently charged with or, to the
knowledge of Blue River or the Blue River Subsidiaries, under governmental
investigation with respect to any actual or alleged violations of any law,
statute, rule, regulation or ordinance; or (iii) the subject of any pending or,
to the knowledge of Blue River or the Blue River Subsidiaries, threatened
proceeding by any government regulatory agency or authority having jurisdiction
over its respective business, assets, capital, properties or operations.
5.08. Financial Statements and Reports. The consolidated financial
statements of Blue River that have been included in Blue River's Annual Report
on Form 10-KSB for its fiscal year ended December 31, 2003 and its Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 2004 and June 30, 2004
(the "Blue River Financial Statements") present fairly the consolidated
financial position, results of operations, and cash flows of Blue River as of
and for the periods covered thereby in conformance with GAAP.
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5.09. Properties, Contracts, and Agreements.
(a) Set forth in the Blue River Disclosure Schedule are:
(i) A brief description and the location of all real
property owned by Blue River and the Blue River
Subsidiaries and the principal buildings and structures
located thereon and each lease of real property to which
Blue River or the Blue River Subsidiaries is a party,
identifying the parties thereto, the annual rental
payable, the expiration date of the lease and a brief
description of the property covered; and
(ii) a list of any agreements, contracts, leases, licenses,
lines of credit, understandings, commitments or
obligations of Blue River or the Blue River Subsidiaries
which individually:
(A) involve payment or receipt by Blue River or the
Blue River Subsidiaries (other than as
disbursements of loan proceeds to customers, loan
payments by customers or customer deposits) of
more than $25,000; or
(B) involve payments based on profits of Blue River or
the Blue River Subsidiaries; or
(C) relate to the purchase of goods, products,
supplies or services in excess of $25,000; or
(D) were not made in the ordinary course of business;
or
(E) may not be terminated without penalty within one
(1) year from the date of this Agreement.
(b) Each of the agreements, contracts, commitments, leases, instruments
and documents listed in the Blue River Disclosure Schedule relating to this
Section 5.09 is valid and enforceable in accordance with its terms, except to
the extent limited by general principles of equity and public policy or by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer,
readjustment of debt or other laws of general application relative to or
affecting the enforcement of creditors' rights, whether now or hereafter in
effect, and except that equitable principles may limit the right to obtain
specific performance and other equitable remedies, and Blue River and the Blue
River Subsidiaries and, to the knowledge of Blue River and the Blue River
Subsidiaries, all other parties thereto are in compliance with the provisions
thereof, and neither Blue River nor the Blue River Subsidiaries is in default in
the performance, observance or fulfillment of any obligation, covenant or
provision contained therein.
(c) None of the agreements, contracts, commitments, leases, instruments
and documents listed in the Blue River Disclosure Schedule relating to this
Section 5.09 requires the
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consent of any party to its assignment in connection with the Mergers
contemplated by this Agreement.
(d) Neither Blue River nor the Blue River Subsidiaries is, to the
knowledge of Blue River or the Blue River Subsidiaries, in default under or in
breach of, or alleged to be in default under or in breach of, any loan or credit
agreement, conditional sales contract or other title retention agreement,
security agreement, bond, indenture, mortgage, license, contract, lease,
commitment or any other instrument or obligation.
5.10. Absence of Undisclosed Liabilities. Except for (A) those liabilities
that are fully reflected or reserved for in the consolidated financial
statements of Blue River included in its Quarterly Report on Form 10-QSB for the
fiscal quarter ended June 30, 2004, as filed with the SEC prior to the date of
this Agreement, (B) liabilities incurred since June 30, 2004 in the ordinary
course of business consistent with past practice, and (C) liabilities which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect upon Blue River, Blue River and the Blue River
Subsidiaries do not have, and since June 30, 2004, Blue River and the Blue River
Subsidiaries have not incurred (except as permitted by this Agreement), any
liabilities or obligations of any nature whatsoever (whether accrued, absolute,
contingent or otherwise and whether or not required to be reflected in Blue
River's financial statements in accordance with generally accepted accounting
principles).
5.11. Title to Assets.
(a) Except as described in this Section 5.11, Blue River or the Blue
River Subsidiaries, as the case may be, has good and marketable title in fee
simple absolute to all real property (including, without limitation, all real
property used as bank premises and all other real estate owned) which is
reflected as assets in the Blue River Financial Statements as of June 30, 2004,
good title to all personal property reflected in the Blue River Financial
Statements as assets as of June 30, 2004, other than personal property disposed
of in the ordinary course of business since June 30, 2004, good title to or
right to use by valid and enforceable lease or contract all other properties and
assets (whether real or personal, tangible or intangible) which Blue River or
the Blue River Subsidiaries purports to own or which Blue River or the Blue
River Subsidiaries uses in its respective business; good title to, or right to
use by terms of a valid and enforceable lease or contract, all other property
used in their respective businesses; and good title to all property and assets
acquired and not disposed of or leased since June 30, 2004. All of such
properties and assets are owned by Blue River or the Blue River Subsidiaries
free and clear of all land or conditional sales contracts, mortgages, liens,
pledges, restrictions, security interests, charges, claims, rights of third
parties or encumbrances of any nature except: (i) as set forth in the Blue River
Disclosure Schedule; (ii) as specifically noted in the Blue River Financial
Statements; (iii) statutory liens for taxes not yet delinquent or being
contested in good faith by appropriate proceedings; (iv) pledges or liens
required to be granted in connection with the acceptance of government deposits
or granted in connection with repurchase or reverse repurchase agreements; and
(v) easements, encumbrances and liens of record, imperfections of title and
other limitations which are not material in amount to Blue River on a
consolidated basis and which do not materially detract from the value or
materially interfere with the present or
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contemplated use of any of the properties subject thereto or impair the use
thereof for the purposes for which they are held or used. All real property
owned or leased by Blue River or the Blue River Subsidiaries is in compliance
with all applicable zoning and land use laws.
(b) All real property, machinery, equipment, furniture and fixtures
owned or leased by Blue River or the Blue River Subsidiaries is structurally
sound, in good operating condition and has been and is being maintained and
repaired in the ordinary course of business in all material respects.
5.12. Employee Benefit Plans.
(a) Blue River's Disclosure Schedule contains a complete list of all
bonus, vacation, deferred compensation, commission-based compensation, pension,
retirement, profit sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock appreciation and stock option
plans, all employment or severance contracts, all medical, dental, disability,
severance, health and life insurance plans, all other employee benefit and
fringe benefit plans, contracts or arrangements and any "change of control" or
similar provisions in any plan, contract or arrangement maintained or
contributed to by Blue River or the Blue River Subsidiaries for the benefit of
current or former officers, employees or directors or the beneficiaries or
dependents of any of the foregoing (collectively, "Compensation Plans").
(b) With respect to each Compensation Plan, if applicable, Blue River
has provided or made available to Heartland, at Heartland's request, true and
complete copies of existing: (A) Compensation Plan documents and amendments
thereto; (B) trust instruments and insurance contracts; (C) the most recent Form
5500 filed with the Internal Revenue Service ("IRS"); (D) the most recent
actuarial report and financial statement; (E) the most recent summary plan
description; (F) forms filed with the PBGC (other than for premium payments);
(G) the most recent determination letter issued by the IRS; (H) any Form 5310 or
Form 5330 filed with the IRS; and (I) the most recent nondiscrimination tests
performed under the Internal Revenue Code of 1986, as amended (the "Code")
(including 401(k) and 401(m) tests).
(c) Except as set forth in the Blue River Disclosure Schedule: (i) each
of the Compensation Plans has been administered and operated in all material
respects in accordance with the terms thereof and with applicable law, including
ERISA, the Code and the Securities Act; (ii) neither Blue River, the Blue River
Subsidiaries nor any other person for whom indemnification by Blue River or the
Blue River Subsidiaries could apply ("Indemnified Person") has incurred or is
likely to incur fiduciary liability under Title I of ERISA with respect to any
Compensation Plan; (iii) each of the Compensation Plans which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension
Plan") and which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS which reflects all
law changes for which a determination may be received, or an application for
such a letter is pending with the IRS, and Blue River is not aware of any
circumstances that would likely result in the revocation or denial of any such
favorable determination letter; (iv) none of Blue River, the Blue River
Subsidiaries or an Indemnified Person has engaged in any transaction or taken
any action with respect to any Compensation
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Plan that has subjected, or could, to Blue River's knowledge, subject Blue River
or the Blue River Subsidiaries or any Indemnified Person to a tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA; and (v)
there is no pending or, to Blue River's knowledge, threatened litigation or
governmental audit, examination or investigation relating to Blue River's
Compensation Plans.
(d) None of the Compensation Plans is a plan, and neither of Blue River
nor the Blue River Subsidiaries ever have maintained or made any contributions
to any plan, that is subject to Part 3 of Title I of ERISA, Title IV of ERISA or
Section 412 of the Code. No Compensation Plan is a "multiemployer plan" within
the meaning of Section 3(37) or 4001(a)(3) of ERISA or a "multiple employer
plan" within the meaning of Section 4064 of ERISA or Section 413(c) of the Code.
Neither Blue River nor the Blue River Subsidiaries has any current or potential
liability or obligation, whether direct or indirect, with respect to any
multiemployer or multiple employer plan.
(e) Except as set forth in the Blue River Disclosure Schedule or as
otherwise provided for in this Agreement, no Compensation Plan provides
benefits, including death or medical benefits, with respect to any employees or
former employees of Blue River or the Blue River Subsidiaries (or their spouses,
beneficiaries, or dependents) beyond the retirement or other termination of
service of any such employee other than (A) coverage mandated by Part 6 of Title
I of ERISA or Section 4980B of the Code, (B) retirement or death benefits under
any Pension Plan, (C) disability benefits under any Compensation Plan which is
an employee welfare benefit plan (as defined under Section 3(1) of ERISA) that
have been fully provided for by insurance or otherwise, (D) benefits in the
nature of severance pay under any Compensation Plan, or (E) miscellaneous other
post-employment benefits not exceeding $10,000 in the aggregate. Except as set
forth in the Blue River Disclosure Schedule or as otherwise provided for in this
Agreement, Blue River and the Blue River Subsidiaries may amend or terminate any
health plan which provides post-retirement or termination of employment benefits
at any time without incurring any liability thereunder. Except as set forth in
the Blue River Disclosure Schedule, there has been no communication to
employees, former employees or their spouses, beneficiaries or dependents by
Blue River or the Blue River Subsidiaries that promised or guaranteed such
employees retiree health or life insurance or other retiree death benefits on a
permanent basis or promised or guaranteed that any such benefits could not be
modified, eliminated or terminated.
(f) Except as set forth in the Blue River Disclosure Schedule or as
otherwise provided for in this Agreement, neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
including, without limitation, any termination of employment relating thereto
and occurring prior to, at or following the Effective Time, will (A) result in
any increase in compensation or any payment (including, without limitation,
severance, golden parachute or otherwise) becoming due to any current or former
director, officer or employee of Blue River or the Blue River Subsidiaries under
any Compensation Plan or otherwise from Blue River or the Blue River
Subsidiaries, (B) increase any benefits otherwise payable under any Compensation
Plan, or (C) result in any acceleration of the time of payment, funding or
vesting of any such benefit; provided, however, that effects described in (A),
(B) or (C), the aggregate compensation and benefit cost impact of which,
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actuarially determined as of the Effective Time, do not exceed $10,000, shall
not be deemed to violate the representations made in this Section 5.12(f).
(g) Except as set forth in the Blue River Disclosure Schedule: (i)
neither Blue River nor the Blue River Subsidiaries maintains any compensation
plans, programs or arrangements the payments under which are, or reasonably
would be expected to be, non-deductible as a result of the limitations under
Section 162(m) of the Code and the regulations issued thereunder; and (ii) none
of Blue River, the Surviving Corporation or any of their respective subsidiaries
will be obligated to make a payment as a result, directly or indirectly, of the
transactions contemplated by this Agreement that reasonably would be expected to
be non-deductible as a result of the limitations under Section 162(m) of the
Code and the regulations issued thereunder.
5.13. Labor Matters. Neither Blue River nor the Blue River Subsidiaries is
a party to or is bound by any collective bargaining contract or understanding
with a labor union or labor organization, nor is Blue River or the Blue River
Subsidiaries the subject of a proceeding asserting that it has committed an
unfair labor practice (within the meaning of the National Labor Relations Act)
or seeking to compel Blue River or the Blue River Subsidiaries to bargain with
any labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or the Blue River Subsidiaries
pending or, to Blue River's knowledge, threatened, nor is Blue River aware of
any activity involving it or the Blue River Subsidiaries employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
5.14. Environmental Matters. Except as set forth in the Blue River
Disclosure Schedule, (i) to Blue River's knowledge, Blue River and the Blue
River Subsidiaries have complied in all material respects at all times with
applicable Environmental Laws; (ii) to Blue River's knowledge, no property
(including buildings and any other structures) currently or formerly owned or
operated by Blue River or the Blue River Subsidiaries has been contaminated
with, or has had any release of, any Hazardous Substance (as defined below);
(iii) to Blue River's knowledge, neither Blue River nor the Blue River
Subsidiaries would reasonably be expected to be ruled to have caused or
contributed to any contamination as the owner or operator under any
Environmental Law of any property in which it has currently or formerly held a
lien; (iv) to Blue River's knowledge, neither Blue River nor the Blue River
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any other third-party property; (v) neither Blue River nor the
Blue River Subsidiaries has received any notice, demand letter, claim or request
for information alleging any violation of, or liability under, any Environmental
Law; (vi) neither Blue River nor the Blue River Subsidiaries is subject to any
order, decree, injunction or other agreement with any federal or state
governmental authority or any third party relating to any Environmental Law;
(vii) to Blue River's knowledge, there are no circumstances or conditions
involving Blue River or the Blue River Subsidiaries or any currently or formerly
owned or operated property (including the presence of asbestos, underground
storage tanks, lead products, polychlorinated biphenyls or gas station sites)
that could result in any claims, liability or investigations or result in any
restrictions on the ownership, use, or transfer of any property pursuant to any
Environmental Law; and (viii) Blue River has delivered to Heartland copies of
all environmental reports, studies, sampling data, correspondence, filings
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and other environmental information in its possession or reasonably available to
it relating to Blue River, the Blue River Subsidiaries, any currently or
formerly owned or operated property or any property in which Blue River or the
Blue River Subsidiaries has held a lien.
5.15. Tax Matters. (i) All returns, declarations, reports, estimates,
information returns and statements required to be filed on or before the
Effective Time under any federal, state, local or foreign tax laws ("Tax
Returns") with respect to Blue River or the Blue River Subsidiaries, have been
or will be timely filed, or requests for extensions have been timely filed and
have not expired; (ii) all Tax Returns that have been filed by Blue River and
the Blue River Subsidiaries since 1997 are complete and accurate in all
respects; (iii) all taxes shown to be due and payable (without regard to whether
such taxes have been assessed) on such Tax Returns (or, with respect to Tax
Returns for which an extension has been timely filed, will be required to be
shown as due and payable when such Tax Returns are filed) have been paid or
adequate reserves have been established for the payment of such taxes; (iv) no
audit or examination or refund litigation with respect to any Tax Return is
pending or, to Blue River's knowledge, has been threatened; (v) all deficiencies
asserted or assessments made as a result of any examination of a Tax Return of
Blue River or the Blue River Subsidiaries have been paid in full; (vi) no
waivers of statutes of limitation have been given by or requested with respect
to any taxes of Blue River or the Blue River Subsidiaries; (vii) Blue River and
the Blue River Subsidiaries have never been a member of an affiliated, combined,
consolidated or unitary tax group for purposes of filing any Tax Return (other
than a consolidated group of which Blue River was the common parent); (viii) no
closing agreements, private letter rulings, technical advice memoranda or
similar agreement or rulings have been entered into or issued by any taxing
authority with respect to Blue River or the Blue River Subsidiaries; (ix) no tax
is required to be withheld pursuant to Section 1445 of the Code as a result of
the transactions contemplated by this Agreement; (x) Blue River and the Blue
River Subsidiaries are not bound by any tax indemnity, tax sharing or tax
allocation agreement or arrangement; and (xi) Blue River and the Blue River
Subsidiaries have withheld and paid all taxes that they are required to withhold
from compensation income of their employees.
5.16. Risk Management. Except as set forth in the Blue River Disclosure
Schedule, Blue River and the Blue River Subsidiaries are not parties to any
swaps, caps, floors, option agreements, futures and forward contracts and other
similar financial risk management arrangements, whether entered into for Blue
River's own account, or for the account of the Blue River Subsidiaries or its
customers.
5.17. Books and Records. The books and records of Blue River and the Blue
River Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies of
any kind contained or reflected therein.
5.18. Loans.
(a) Except as set forth in the Blue River Disclosure Schedule, there is
no loan by the Blue River Subsidiaries which was included in the Blue River
Financial Statements as of June 30, 2004 or which has been made or acquired
since June 30, 2004, in excess of $25,000 that has been classified by the Blue
River Subsidiaries' regulators or management as "Other Loans
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Specially Mentioned," "Substandard," "Doubtful" or "Loss" or that has been
identified by accountants or auditors (internal or external) as having a
significant risk of uncollectability. The most recent loan watch list of the
Blue River Subsidiaries, and a list of all loans in excess of $25,000 which the
Blue River Subsidiaries, has determined to be thirty (30) days or more past due
with respect to principal or interest payments or has placed on nonaccrual
status, have been provided to Heartland.
(b) All loans reflected in the Blue River Financial Statements as of
June 30, 2004 and which have been made, extended, renewed, restructured,
approved, amended or acquired since June 30, 2004: (i) to the knowledge of Blue
River and the Blue River Subsidiaries, constitute the legal, valid and binding
obligation of the obligor and any guarantor named therein, except to the extent
limited by general principles of equity and public policy or by bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt or other laws of general application relative to or
affecting the enforcement of creditors' rights; (ii) are evidenced by notes,
instruments or other evidences of indebtedness which are true, genuine and what
they purport to be; and (iii) are secured, to the extent that Blue River or the
Blue River Subsidiaries has a security interest in collateral or a mortgage
securing such loans, by perfected security interests or recorded mortgages
naming Blue River or the Blue River Subsidiaries as the secured party or
mortgagee.
(c) The allowance for possible loan losses shown on the Blue River
Financial Statements are adequate in all respects under the requirements of GAAP
applied on a consistent basis to provide for possible losses on items for which
reserves were made, on loans and leases outstanding and real estate owned as of
the respective dates.
5.19. Shareholder Rights Plan. Except as otherwise provided in this
Agreement, the Blue River Disclosure Schedule and Blue River's Articles of
Incorporation and By-Laws, Blue River has no shareholder rights plan or any
other plan, program or agreement involving, restricting, prohibiting or
discouraging a change in control or merger of Blue River or which may be
considered an anti-takeover mechanism.
5.20. Deposit Insurance. The deposits of the Blue River Subsidiaries are
insured by the FDIC in accordance with the FDIA, and Blue River or the Blue
River Subsidiaries, have paid or properly reserved or accrued for all current
premiums and assessments with respect to such deposit insurance.
5.21. Insurance. Set forth in the Blue River Disclosure Schedule is a list
and brief description of all policies of insurance (including, without
limitation, bankers' blanket bond, directors' and officers' liability insurance,
property and casualty insurance, group health or hospitalization insurance and
insurance providing benefits for employees) owned or held by Blue River or the
Blue River Subsidiaries on the date hereof or with respect to which Blue River
or the Blue River Subsidiaries pays any premiums. Each such policy is in full
force and effect and all premiums due thereon have been paid when due, and a
true, accurate and complete copy thereof has been made available to Heartland
prior to the date hereof.
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5.22. Broker's, Finder's or Other Fees. Except for reasonable fees of Blue
River's attorneys, accountants, employee benefits consultants and investment
bankers, no agent, broker or other person acting on behalf of Blue River or the
Blue River Subsidiaries or under any authority of Blue River or the Blue River
Subsidiaries is or shall be entitled to any commission, broker's or finder's fee
or any other form of compensation or payment from any of the parties hereto
relating to this Agreement and the Mergers contemplated hereby. No action has
been taken by Blue River that would give rise to any valid claim against any
party hereto for a brokerage commission, finder's fee or other like payment with
respect to the transactions contemplated by this Agreement, excluding a fee to
be paid by Blue River to Xxxx in an amount and on terms set forth in the Blue
River Disclosure Schedule.
5.23. Interim Events.
(a) Except as set forth in the Blue River Disclosure Schedule, since
June 30, 2004, no event has occurred and no fact or circumstance shall have come
to exist which, directly or indirectly, individually or taken together with all
other facts, circumstances and events, has had, or is reasonably likely to have,
a Material Adverse Effect.
(b) Except as set forth in the Blue River Disclosure Schedule and except
for the activities in connection with the Mergers, since June 30, 2004, Blue
River and the Blue River Subsidiaries have carried on their respective
businesses in the ordinary and usual course consistent with their respective
past practices and there has not been:
(i) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock
or property) with respect to Blue River Common Stock; or
(ii) any split, combination or reclassification of any
capital stock of Blue River or the Blue River
Subsidiaries or any issuance or the authorization of any
issuance of any other securities in respect of, or in
lieu of or in substitution for shares of Blue River
Common Stock, except for issuances of Blue River Common
Stock upon the exercise of options awarded prior to the
date hereof in accordance with the terms of the Blue
River Stock Option Plans.
5.24. Regulatory Filings. Blue River and the Blue River Subsidiaries
respectively, have since January 1, 2003, filed (or furnished) in a timely
manner all documents require to be filed with (or furnished to) all appropriate
federal and state regulatory agencies and authorities as required by applicable
law including, but not limited to, all reports on Form 8-K, Form 10-KSB and Form
10-QSB and proxy statements and annual reports required to be filed by Blue
River with (or furnished to) the SEC. All documents filed with (or furnished to)
the SEC and all other appropriate federal and state regulatory agencies were
true, accurate and complete and have complied as to form with the applicable
requirements. No such document contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
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statements made therein, at the time and in light of the circumstances under
which they were made, not false or misleading.
5.25. Indemnification Agreements.
(a) Neither Blue River nor the Blue River Subsidiaries is a party to any
indemnification, indemnity or reimbursement agreement, contract, commitment or
understanding to indemnify any present or former director, officer, employee,
shareholder or agent against liability or hold the same harmless from liability
other than as expressly provided in the Articles of Incorporation or the By-Laws
of Blue River and the Blue River Subsidiaries.
(b) No claims have been made against or filed with Blue River or the
Blue River Subsidiaries nor have, to the knowledge of Blue River, any claims
been threatened against Blue River or the Blue River Subsidiaries for
indemnification against liability or for reimbursement of any costs or expenses
incurred in connection with any legal or regulatory proceeding by any present or
former director, officer, shareholder, employee or agent of Blue River or the
Blue River Subsidiaries.
5.26. Shareholder Approval. The affirmative vote of the holders of a
majority of the shares of Blue River Common Stock (which are issued and
outstanding on the record date relating to the meeting of shareholders) is
required for shareholder approval of this Agreement and the Company Merger.
5.27. CRA Rating. Except as set forth in the Blue River Disclosure
Schedule, each of Shelby County Bank and Unified was rated "Satisfactory" or
"Outstanding" following its most recent Community Reinvestment Act examination
by the regulatory agency responsible for its supervision. Neither Shelby County
Bank nor Unified has received any notice of and has no knowledge of any planned
or threatened objection by any community group to the transactions contemplated
hereby.
5.28. Capital Requirements.
(a) The Blue River Subsidiaries are (i) at least "well capitalized", as
defined for purposes of the FDIA, and (ii) in compliance with all capital
requirements, standards and ratios required by each state or federal bank
regulator with jurisdiction over the Blue River Subsidiaries.
(b) Blue River is in compliance with all capital requirements, standards
and ratios required by each state or federal regulator with jurisdiction over
Blue River.
5.29. Accuracy of Statements Made and Materials Provided to Heartland.
(a) No representation, warranty in this Section 5 or other statement
made, or any information provided, by Blue River or the Blue River Subsidiaries
in this Agreement or the Blue River Disclosure Schedule (and any update
thereto), and no written report, statement, list, certificate, materials or
other written information furnished or to be furnished by Blue River or
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the Blue River Subsidiaries to Heartland through and including the Effective
Time in connection with this Agreement or the Mergers contemplated hereby
(including, without limitation, any written information which has been or shall
be supplied by Blue River or the Blue River Subsidiaries with respect to their
respective financial condition, results of operations, business, assets, capital
or directors and officers for inclusion in the proxy statement-prospectus and
registration statement relating to the Company Merger), contains or shall
contain (in the case of information relating to the proxy statement-prospectus
at the time it is mailed to Blue River's shareholders) any untrue statement of
material fact or omits or shall omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they are made and in light of the total mix of information known to Blue
River, not false or misleading.
(b) The Blue River Disclosure Schedule contains, to the knowledge of
Blue River and the Blue River Subsidiaries, any and all exceptions to one or
more of the representations and warranties contained in this Section 5 or to one
or more of the covenants of Blue River contained in Section 7 hereof, regardless
of the materiality of the facts, circumstances or events relating to such
exception or whether such exception constitutes a Material Adverse Effect.
SECTION 6
COVENANTS OF HEARTLAND AND HEARTLAND BANK
Heartland and Heartland Bank covenant and agree with Blue River and Shelby
County Bank as follows:
6.01. Shareholder Approval.
(a) Subject to Section 6.06 hereof and all applicable securities laws,
Heartland shall submit this Agreement to its shareholders for approval and
adoption at a meeting to be called and held in accordance with applicable law
and the Articles of Incorporation and By-Laws of Heartland. Heartland may at its
option call the meeting to be held at such date as shall approximate the
parties' reasonable expectations regarding the projected date for the Effective
Time, taking into account the status of and progress of the parties toward
obtaining all required bank regulatory approvals. Subject to Section 6.06
hereof, the Board of Directors of Heartland shall recommend to Heartland's
shareholders that such shareholders approve and adopt this Agreement and the
Company Merger contemplated hereby and shall solicit proxies voting in favor of
this Agreement from Heartland's shareholders unless otherwise necessary under
applicable fiduciary duties of Heartland's Board of Directors as determined by
the Board of Directors of Heartland in good faith after consultation with legal
counsel.
(b) Subject to Section 6.06 hereof, Heartland Bank shall submit this
Agreement to Heartland, as its sole shareholder, for approval by unanimous
written consent without a meeting in accordance with applicable law and the
Articles of Incorporation and By-laws of Heartland Bank at a date reasonably in
advance of the Effective Time. The Board of Directors of Heartland Bank shall
recommend approval of this Agreement and the Bank Merger to Heartland, as the
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sole shareholder of Heartland Bank, and Heartland, as sole shareholder of
Heartland Bank, shall approve this Agreement and the Bank Merger.
6.02. SEC Registration. Heartland shall cooperate with Blue River in the
preparation and filing of the Joint Proxy Statement/Prospectus (as defined in
Section 7.02(a) hereof) and in the taking any action required to be taken under
any applicable state securities laws in connection with the Company Merger and
shall furnish all information concerning it and the holders of its capital stock
as may be reasonably requested in connection with any such action. If at any
time prior to the Effective Time any information relating to Heartland, or its
affiliates, officers or directors, should be discovered by Heartland, which
should be set forth in an amendment or supplement to any of the Form S-4 (as
defined in Section 7.02(a) hereof) or the Joint Proxy Statement/Prospectus so
that such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, Heartland
shall promptly notify Blue River and cooperate in the filing of an appropriate
amendment or supplement describing such information with the SEC and
disseminating the same to the shareholders of Blue River and Heartland.
6.03. Other Approvals and Actions.
(a) Heartland Bank shall have primary responsibility for the
preparation, filing and costs of all bank regulatory applications required for
consummation of the Bank Merger. Heartland Bank shall file all applications with
respect to the Bank Merger as soon as practicable after the execution of this
Agreement. Heartland Bank shall provide to Shelby County Bank's legal counsel a
reasonable opportunity to review such applications prior to their filing and
shall provide to Shelby County Bank's legal counsel copies of all applications
filed and copies of all material written communications with all state and
federal bank regulatory agencies relating to such applications. Heartland Bank
shall proceed expeditiously, cooperate fully and use its reasonable efforts to
procure, upon terms and conditions reasonably acceptable to Shelby County Bank,
all consents, authorizations, approvals, registrations and certificates, to
complete all filings and applications and to satisfy all other requirements
prescribed by law which are necessary for consummation of the Bank Merger on the
terms and conditions provided in this Agreement at the earliest possible
reasonable date.
(b) Heartland and Heartland Bank will proceed expeditiously, cooperate
fully and use their reasonable efforts to assist Blue River in procuring upon
reasonable terms and conditions all consents, authorizations, approvals,
registrations and certificates, in completing all filings and applications and
in satisfying all other requirements prescribed by law which are necessary for
consummation of the Company Merger on the terms and conditions provided in this
Agreement at the earliest possible reasonable date.
(c) Any materials or information provided by Heartland or Heartland Bank
to Blue River for use by Blue River or Shelby County Bank in any filing with any
state or federal regulatory agency or authority shall not contain any untrue or
misleading statement of material
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fact and shall not omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they are
made, not false or misleading.
6.04. Conduct of Business.
(a) Except as set forth in the Disclosure Schedule, on and after the
date of this Agreement and until the Effective Time or until this Agreement
shall be terminated as herein provided, neither Heartland nor Heartland Bank
shall, without the prior written consent of Blue River or Shelby County Bank:
(i) issue additional capital stock or make any changes in
its capital stock accounts (including, without
limitation, any stock split, stock dividend,
recapitalization or reclassification), except for the
issuance of up to 211,544 shares of Heartland Common
Stock under the Heartland Stock Option Plans;
(ii) authorize a class of stock or issue, or authorize the
issuance of, securities other than or in addition to
the issued and outstanding common stock as set forth in
Section 4.03 hereof;
(iii) distribute or pay any dividends on its shares of common
stock, or make any other distribution to its
shareholders except that Heartland Bank may pay cash
dividends to Heartland in the ordinary course of
business;
(iv) redeem or purchase any of its outstanding shares of
common stock;
(v) merge, combine or consolidate or effect a share
exchange with or sell substantially all of its assets
or any securities issued by it to any other person,
corporation or entity;
(vi) purchase any assets or securities or assume any
liabilities of another bank holding company, bank,
corporation or other entity, except in the ordinary
course of business;
(vii) issue any letter of credit or accept any deposit,
except in the ordinary course of business in accordance
with its existing banking practices;
(viii) except for the acquisition or disposition in the
ordinary course of business of other real estate owned,
acquire or dispose of any real or personal property or
fixed asset constituting a capital investment in excess
of $25,000 individually or $100,000 in the aggregate;
(ix) subject any of its properties or assets to a mortgage,
lien, claim, charge, option, restriction, security
interest or encumbrance, except
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for tax and other liens which arise by operation of law
and with respect to which payment is not past due or is
being contested in good faith by appropriate
proceedings and except for pledges or liens: (i)
required to be granted in connection with acceptance by
Heartland or Heartland Bank of government deposits;
(ii) granted in connection with repurchase or reverse
repurchase agreements; or (iii) otherwise incurred in
the ordinary course of the conduct of its business;
(x) promote to a new position or increase the rate of
compensation or enter into any agreement to promote to
a new position or increase the rate of compensation, of
any director, officer or employee of Heartland or
Heartland Bank (except for promotions and compensation
increases in the ordinary course of business and in
accordance with past practices and established
employment policies of Heartland and Heartland Bank
which have been disclosed to Blue River);
(xi) except as agreed to herein, execute, create, institute,
modify, amend or terminate (except with respect to any
amendments required by law, rule or regulation) any
pension, retirement, savings, stock purchase, stock
bonus, stock ownership, stock option, stock
appreciation or depreciation rights or profit sharing
plans, or any employment, deferred compensation,
consulting, bonus or collective bargaining agreement,
or any group insurance or health contract or policy, or
any other incentive, retirement, welfare or employee
welfare benefit plan, agreement or understanding for
current or former directors, officers or employees of
Heartland or Heartland Bank, or change the level of
benefits or payments under any of the foregoing, or
increase or decrease any severance or termination
benefits or any other fringe or employee benefits other
than as required by law or regulatory authorities or
the terms of any of the foregoing;
(xii) except as agreed to herein, modify, amend or institute
new employment policies or practices, or enter into,
renew or extend any employment, indemnity,
reimbursement, consulting, compensation or severance
agreements with respect to any present or former
directors, officers or employees of Heartland or
Heartland Bank;
(xiii) hire or employ any new or additional officers of
Heartland or Heartland Bank, except as reasonably
necessary for the proper operation of their respective
businesses;
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(xiv) elect or appoint any executive officers or directors
of Heartland or Heartland Bank who are not presently
serving in such capacities;
(xv) except for technical corrections or clarifications
amend, modify or restate Heartland's or Heartland
Bank's respective organizational documents (as
described in Section 4.04 hereof) from those in effect
on the date of this Agreement and delivered to Blue
River hereunder;
(xvi) give, dispose of, sell, convey or transfer; assign,
hypothecate, pledge or encumber; or grant a security
interest in or option to or right to acquire any
shares of common stock or substantially all of the
assets of Heartland or enter into any agreement or
commitment relative to the foregoing;
(xvii) fail to continue to make additions to in accordance
with Heartland Bank's past practices and to otherwise
maintain in all respects Heartland Bank's reserve for
loan and lease losses, or any other reserve account,
in accordance with safe, sound, and prudent banking
practices and in accordance with accounting principles
generally accepted in the United States and applied on
a consistent basis;
(xviii) fail to accrue, pay, discharge and satisfy all debts,
liabilities, obligations and expenses, including, but
not limited to, trade payables, incurred in the
regular and ordinary course of business as such debts,
liabilities, obligations and expenses become due;
(xix) except for obligations disclosed within this Agreement
or the Disclosure Schedule or incurred in the ordinary
course of business, borrow any money;
(xx) open, close, move or, in any material respect, expand,
diminish, renovate, alter or change any of its offices
or branches;
(xxi) pay or commit to pay any management or consulting or
other similar type of fees other than in the ordinary
course of business or as disclosed within this
Agreement or the Disclosure Schedule; or
(xxii) enter into any agreement, arrangement or understanding
with respect to any of the foregoing.
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(b) Heartland and Heartland Bank shall maintain, or cause to be
maintained, in full force and effect, insurance on their respective assets,
properties and operations, fidelity coverage and directors' and officers'
liability insurance on their directors, officers and employees in such amounts
and with regard to such liabilities and hazards as are currently insured by
Heartland and Heartland Bank as of the date of this Agreement.
6.05. Preservation of Business. On and after the date of this Agreement
and until the Effective Time or until this Agreement is terminated as herein
provided, Heartland and Heartland Bank shall: (a) carry on their respective
businesses substantially in the manner as is presently being conducted and in
the ordinary course of business; (b) use their reasonable efforts to preserve
their business respective organizations intact, keep available the services of
the present officers and employees and preserve their present relationships with
customers and persons having business dealings with them; (c) maintain all of
the properties and assets that each of them owns or utilizes in good operating
condition and repair, reasonable wear and tear excepted, and maintain insurance
upon such properties and assets in amounts and kinds comparable to that in
effect on the date of this Agreement; (d) maintain their respective books,
records and accounts in the usual, regular and ordinary manner, on a basis
consistent with prior years and in compliance with all material respects with
all statutes, laws, rules and regulations applicable to them and to the conduct
of their business; and (e) not knowingly do or fail to do anything which will
cause a breach of, or default in, any contract, agreement, commitment,
obligation, understanding, arrangement, lease or license to which any one of
them is a party or by which any one of them is or may be subject or bound.
6.06. Other Negotiations.
(a) On and after the date of this Agreement and until the Effective Time
or until this Agreement is terminated as herein provided, except with the prior
written approval of Blue River, neither Heartland nor Heartland Bank shall
permit nor authorize their respective directors, officers, employees, agents or
representatives to, directly or indirectly, initiate, solicit or encourage, or
provide information to, any corporation, association, partnership, person or
other entity or group concerning any merger, consolidation, share exchange,
combination, purchase or sale of substantial assets, sale of shares of common
stock (or securities convertible or exchangeable into or otherwise evidencing,
or any agreement or instrument evidencing the right to acquire, capital stock)
or similar transaction relating to Heartland or Heartland Bank or to which
Heartland or Heartland Bank may become a party (all such transactions are
hereinafter referred to as "Acquisition Transactions").
(b) Heartland shall promptly communicate to Blue River the terms of any
proposal, indication of interest, or offer which Heartland or Heartland Bank may
receive with respect to an Acquisition Transaction. Heartland or Heartland Bank
may, in response to an unsolicited written proposal, indication of interest, or
offer with respect to an Acquisition Transaction from a third party, furnish
information to, and negotiate, explore or otherwise engage in substantive
discussions with such third party, and enter into agreements, arrangements or
understandings with such third party with respect to such Acquisition
Transaction, in each case, only if Heartland's Board of Directors determines in
good faith by majority vote, after consultation with
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Heartland's financial advisors and outside legal counsel in a meeting duly
called and held in accordance with Heartland's Bylaws, that failing to take such
action would likely be inconsistent with the fiduciary duties of the members of
Heartland's Board of Directors to Heartland, and that the terms of the
Acquisition Transaction are superior to the terms of the Company Merger from a
financial point of view.
(c) This Section 6.06 shall not authorize Heartland or Heartland Bank or
any of their directors, officers, employees, agents or representatives, to
initiate any discussions or negotiations with respect to an Acquisition
Transaction with a third party.
6.07. Restrictions Regarding Affiliates. Heartland has provided Blue River
with a list identifying each person who may be deemed to be an affiliate of
Heartland for purposes of Rule 145 under the Securities Act, and has delivered
to Blue River a written agreement, substantially in the form as attached hereto
as Exhibit E, signed by each such person. Heartland shall use its reasonable
efforts to cause each person who becomes such an affiliate prior to the
Effective Time also to deliver such a written agreement to Blue River. On or
prior to the Effective Time, Heartland shall use its reasonable efforts to
obtain from each director, executive officer and other person who, as of the
date of the Heartland shareholder meeting held with respect to the Company
Merger, may have been deemed to be an affiliate of Heartland for purposes of
Rule 145 under the Securities Act, to deliver to Blue River a certificate signed
by each such person, and effective as of a date not earlier than five business
days prior to the Closing Date, certifying that such person has complied with
the terms and conditions of his or her written agreement delivered to Blue River
pursuant to this Section 6.07.
6.08. Press Releases. Heartland shall use reasonable efforts (i) to
develop a joint communications plan with Blue River, (ii) to ensure that all
press releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications plan, and
(iii) except in respect of any announcement required by applicable law or by
obligations pursuant to any listing agreement with or rules of NASDAQ, to
consult with Blue River before issuing any press release or, to the extent
practical, otherwise making any public statement with respect to this Agreement
or the transactions contemplated hereby. In addition to the foregoing, except to
the extent disclosed in or consistent with the Joint Proxy Statement/Prospectus,
Heartland shall not issue any press release or otherwise make any public
statement or disclosure concerning Blue River of the Blue River Subsidiaries,
their respective business, financial condition or results of operations without
the consent of Blue River, which consent shall not be unreasonably withheld or
delayed.
6.09. Disclosure Schedule Update. Heartland shall promptly supplement,
amend and update, upon the occurrence of any change prior to the Effective Time,
and as of the Effective Time, the Disclosure Schedule with respect to any
matters or events hereafter arising which, if in existence or having occurred as
of the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule or this Agreement and including, without
limitation, any fact which, if existing or known as of the date hereof, would
have made any of the representations or warranties of Heartland contained herein
incorrect, untrue or misleading.
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No such supplement, amendment or update shall become part of the Disclosure
Schedule unless Blue River shall have first consented in writing with respect
thereto.
6.10. Information, Access Thereto, Confidentiality.
(a) Blue River and its respective representatives and agents shall, upon
48 hours' prior notice and during normal business hours prior to the Effective
Time, have reasonable access to the properties, facilities, operations, books
and records of Heartland and Heartland Bank. Blue River and its respective
representatives and agents may, prior to the Effective Time, make or cause to be
made such reasonable investigation of the operations, books, records and
properties of Heartland and Heartland Bank and of their financial and legal
condition as they deem necessary or advisable; provided, however, that such
access or investigation shall not interfere with the normal business operations
of Heartland and Heartland Bank. Heartland and Heartland Bank will cooperate
with Blue River and the Blue River Subsidiaries in their efforts to effect a
smooth transition of operations following the Effective Time. In addition,
Heartland and Heartland Bank will cooperate with any environmental consulting
firm designated by Blue River in connection with the conduct by such firm of an
environmental investigation on all real property owned or leased by Heartland or
Heartland Bank as of the date of this Agreement and any real property acquired
or leased by them after the date of this Agreement. Upon request, Heartland and
Heartland Bank shall furnish Blue River, or its respective representatives or
agents, their attorneys' responses to external auditors requests for
information, management letters received from their external auditors and such
financial, loan and operating data and other information reasonably requested by
Blue River which has been or is developed by Heartland or Heartland Bank, their
auditors, accountants or attorneys (provided with respect to attorneys, such
disclosure would not result in the waiver by Heartland or Heartland Bank of any
claim of attorney-client privilege), and will permit Blue River and its
respective representatives or agents to discuss such information directly with
any individual or firm performing auditing or accounting functions for Heartland
and Heartland Bank, and such auditors and accountants shall be directed to
furnish copies of any reports or financial information as developed to Blue
River or its respective representatives or agents. Blue River shall not use any
such information obtained pursuant to this Agreement for any purpose unrelated
to the Mergers. Any confidential information or trade secrets received by Blue
River or its representatives or agents in the course of such examination
(whether conducted prior to or after the date of this Agreement) shall be
treated confidentially, and any correspondence, memoranda, records, copies,
documents and electronic or other media of any kind containing such confidential
information or trade secrets or both shall be destroyed by Blue River or, at
Heartland's request, returned to Heartland in the event this Agreement is
terminated as provided in Section 9 hereof.
(b) Heartland shall not use any information obtained pursuant to this
Agreement or in contemplation of the Mergers, including any information obtained
as a result of their officers and employees participating in training programs
or meetings of Blue River or the Blue River Subsidiaries, for any purpose
unrelated to the Mergers. Any confidential information or trade secrets received
by Heartland or Heartland Bank or their representatives or agents pursuant to
this Agreement or in contemplation of the Mergers (whether conducted prior to or
after the date of this Agreement) shall be treated confidentially, and any
correspondence, memoranda, records,
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copies, documents and electronic or other media of any kind containing such
confidential information or trade secrets or both shall be destroyed by
Heartland or, at Blue River's request, returned to Blue River in the event this
Agreement is terminated as provided in Section 9 hereof.
(c) This Section 6.10 shall not require any party to disclose any
information to any other party which would be prohibited by law; provided that,
if any information is withheld on the basis that disclosure of such would be
prohibited by law, such party shall advise the other party in writing of the
type and nature of the information that is not being disclosed and the basis for
that party's legal conclusion that providing that information would be illegal.
6.11. Subsequent Heartland Financial Statements. As soon as reasonably
available after the date of this Agreement, Heartland shall deliver to Blue
River the monthly unaudited consolidated balance sheets and profit and loss
statements of Heartland prepared for its internal use, Call Reports of Heartland
Bank for each quarterly period completed prior to the Effective Time, and all
other financial reports or statements submitted to regulatory authorities
including the SEC after the date hereof, to the extent permitted by law
(collectively, the "Subsequent Heartland Financial Statements"). The Subsequent
Heartland Financial Statements shall be prepared on a basis consistent with past
accounting practices and accounting principles generally accepted in the United
States applied on a consistent basis to the extent applicable (or, in the case
of bank regulatory reports, in accordance with applicable instructions and bank
regulatory accounting principles and practices) and shall present fairly in all
material respects the financial condition, results of operations and cash flows
of the reporting entity as of the dates and for the periods presented, subject
to the absence of footnotes for interim statements.
6.12. Employee Benefits.
(a) Prior to the Closing Date, Heartland shall cooperate with Blue River
in reviewing, evaluating and analyzing the Heartland Benefit Plans and Blue
River Benefit Plans with a view towards developing appropriate new benefit plans
for the employees covered thereby subsequent to the Mergers. It is the intention
of Blue River and Heartland to develop new benefit plans, as soon as reasonably
practicable after the Effective Time, which, among other things, (i) treat
similarly situated employees on a substantially equivalent basis, taking into
account all relevant factors, including, without limitation, duties, geographic
location, tenure, qualifications and abilities, and (ii) do not discriminate
between employees of the Surviving Corporation who were covered by Blue River
Benefit Plans, on the one hand, and those covered by Heartland Benefit Plans, on
the other, at the Effective Time.
(b) The foregoing notwithstanding, Heartland Bank agrees to honor in
accordance with their terms all benefits vested as of the date here of under of
the employment and/or change in control contracts, arrangements, commitments, or
understandings described in the Blue River Disclosure Schedule with respect to
any current or prior employee, officer or Director of Shelby County Bank.
6.13. Redemption of Rights. Heartland's Board of Directors shall, on or
before the Closing Date, adopt a resolution pursuant to Section 23 of the Rights
Agreement redeeming all
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of the Rights, subject to and effective at the Effective Time, in consideration
of the Blue River Stock to be issued to holders of the Rights pursuant to the
Company Merger by Blue River under this Agreement.
6.14. Reports. Promptly upon its becoming available, Heartland shall
furnish to Blue River one (1) copy of each financial statement, report, notice,
or proxy statement sent by Heartland to its shareholders generally and of each
regular or periodic report, registration statement or prospectus filed by
Heartland with the SEC or any successor agency, and of any order issued by any
Governmental Authority in any proceeding to which Heartland or Heartland Bank is
a party, other than orders in relation to non-dispositive motions that are
entered in proceedings to which Heartland or Heartland Bank are parties in
connection with the ordinary course of their businesses.
6.15. Indemnification.
(a) From and after the Effective Time, Heartland Bank shall indemnify,
defend and hold harmless to the fullest extent permitted by applicable federal
and state law (subject to the policies and principles of Federal Reserve Board
Supervisory Letter SR 02-17 (July 8, 2002) and the laws and regulations referred
to in such Letter) each person who is on the date hereof, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, a
director or officer of Shelby County Bank or was serving at the request of
Shelby County Bank as a director or an officer of any domestic or foreign
corporation, joint venture, trust, employee benefit plan (collectively, the
"Indemnitees") against any and all losses and expenses in connection with or
arising out of any claim which is based upon, arises out of or in any way
relates to any actual or alleged act or omission occurring at or prior to the
Effective Time in the Indemnitee's capacity as a director or officer (whether
elected or appointed), of Shelby County Bank (or in the course of the requested
service described above), to the fullest extent as such Indemnitees would have
been entitled to such indemnity, defense and hold harmless protection under the
provisions of Shelby County Bank's Charter or By-Laws in effect at the Effective
Time.
(b) In the event Heartland Bank or any of its successors or assigns (i)
consolidates with or merges into any other corporation or entity and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person or entity, then, and in each case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
Heartland Bank assume the obligations set forth in this Section 6.15.
(c) Heartland Bank shall maintain in effect for not less than two (2)
years from the Effective Time the policies of directors' and officers' liability
insurance most recently maintained by Shelby County Bank with respect to claims
that may be made during that two-year period against the persons covered by such
policies as of the Effective Time that relate to matters that occurred prior to
the Effective Time; provided, however, that Heartland Bank may substitute
therefor policies with reputable and financially sound carriers for
substantially similar coverage containing terms and conditions which are no less
advantageous for so long as such
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substitution does not result in gaps or lapses in coverage with respect to
claims arising from or relating to matters occurring prior to the Effective
Time; and provided, further, that Heartland Bank shall not be obligated to make
annual premium payments for such insurance to the extent such premiums exceed
200% of the premiums paid as of the date hereof by Shelby County Bank for such
insurance ("SCB's Current Premium"), and if such premiums for such insurance
would at any time exceed 200% of SCB's Current Premium, then Heartland Bank
shall cause to be maintained policies of insurance which, in Heartland Bank's
good faith determination, provide the maximum coverage available at an annual
premium equal to 200% of SCB's Current Premium.
(d) The provisions of this Section 6.15 are intended to be for the
benefit of, and shall be enforceable by, each Indemnitee and their respective
heirs and representatives.
6.16. Adverse Actions. Heartland shall not (a) knowingly take any action
while knowing that such action would, or is reasonably likely to, prevent or
impede the Mergers from qualifying as a reorganization within the meaning of
Section 368 of the Code; or (b) knowingly take any action or inaction that is
intended or is reasonably likely to result in (i) any of its representations and
warranties set forth in this Agreement being or becoming untrue, subject to the
Heartland Disclosure Standard, in any respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Mergers set forth in Section 8
not being satisfied, (iii) a material violation of any provision of this
Agreement or (iv) a delay in the consummation of the Mergers except, in each
case, as may be required by applicable law or regulation.
SECTION 7
COVENANTS OF BLUE RIVER AND SHELBY COUNTY BANK
Blue River and Shelby County Bank covenant and agree with Heartland and
Heartland Bank as follows:
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7.01. Shareholder Approval.
(a) Subject to Section 7.06 hereof and all applicable securities laws,
Blue River shall submit this Agreement to its shareholders for approval and
adoption at a meeting to be called and held in accordance with applicable law
and the Articles of Incorporation and By-Laws of Blue River. Blue River may at
its option call the meeting to be held at such date as shall approximate the
parties' reasonable expectations regarding the projected date for the Effective
Time, taking into account the status of and progress of the parties toward
obtaining all required bank regulatory approvals. Subject to Section 7.06
hereof, the Board of Directors of Blue River shall recommend to Blue River's
shareholders that such shareholders approve and adopt this Agreement and the
Company Merger contemplated hereby and shall solicit proxies voting in favor of
this Agreement from Blue River's shareholders unless otherwise necessary under
applicable fiduciary duties of Blue River's Board of Directors as determined by
the Board of Directors of Blue River in good faith after consultation with legal
counsel.
(b) Subject to Section 7.06 hereof, Shelby County Bank shall submit this
Agreement to Blue River, as its sole shareholder, for approval by unanimous
written consent without a meeting in accordance with applicable law and the
Charter and By-laws of Shelby County Bank at a date reasonably in advance of the
Effective Time. The Board of Directors of Shelby County Bank shall recommend
approval of this Agreement and the Bank Merger to Blue River, as the sole
shareholder of Shelby County Bank, and Blue River, as sole shareholder of Shelby
County Bank, shall approve this Agreement and the Bank Merger.
7.02. SEC Registration.
(a) Blue River shall have primary responsibility for the preparation,
filing and costs of, and shall as promptly as reasonably practicable following
the date hereof, cause to be filed with the SEC, in a form reasonably acceptable
to Blue River and Heartland, proxy materials which shall constitute the proxy
statement/prospectus relating to the matters to be submitted to the Heartland
shareholders and to the Blue River shareholders at their respective shareholder
meetings (such joint proxy statement/prospectus, and any amendments or
supplements thereto, the "Joint Proxy Statement/Prospectus"), and Blue River
shall prepare and file with the SEC a registration statement on Form S-4 (of
which the Joint Proxy Statement/Prospectus shall be a part) with respect to the
issuance of Blue River Common Stock in the Company Merger (such Form S-4, and
any amendments or supplements thereto, the "Form S-4"). Blue River shall use
reasonable efforts to have the Joint Proxy Statement/Prospectus cleared by the
SEC and the Form S-4 declared effective by the SEC and to keep the Form S-4
effective as long as is necessary to consummate the Company Merger and the
transactions contemplated thereby.
(b) Blue River shall, as promptly as practicable after receipt thereof,
provide Heartland with copies of any written comments and advise Heartland of
any oral comments with respect to the Joint Proxy Statement/Prospectus or Form
S-4 received from the SEC. Blue River shall provide Heartland with a reasonable
opportunity to review and comment on any amendment or supplement to the Joint
Proxy Statement/ Prospectus and the Form S-4 prior to
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filing such with the SEC and will provide Heartland with a copy of all such
filings made with the SEC.
(c) Blue River shall use reasonable efforts to take any action required
to be taken under any applicable state securities laws in connection with the
Company Merger.
(d) Blue River will advise Heartland, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective, the issuance of any
stop order, the suspension of the qualification of the Blue River Common Stock
issuable in connection with the Company Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint Proxy
Statement/Prospectus or the Form S-4.
(e) If at any time prior to the Effective Time any information relating
to Blue River or Heartland, or their respective affiliates, officers or
directors, should be discovered by, or communicated to, Blue River, which should
be set forth in an amendment or supplement to any of the Form S-4 or the Joint
Proxy Statement/Prospectus so that such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, Blue River shall, if not otherwise know by Heartland
promptly notify Heartland and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and disseminated to the shareholders of
Blue River and Heartland.
7.03. Other Approvals and Actions.
(a) Blue River shall have primary responsibility for the preparation,
filing and costs of all bank holding company and bank regulatory applications
required for consummation of the Company Merger. Blue River shall file all bank
holding company applications with respect to the Company Merger as soon as
practicable after the execution of this Agreement. Blue River shall provide to
Heartland's legal counsel a reasonable opportunity to review such applications
prior to their filing and shall provide to Heartland's legal counsel copies of
all applications filed and copies of all material written communications with
all state and federal bank regulatory agencies relating to such applications.
Blue River shall proceed expeditiously, cooperate fully and use its reasonable
efforts to procure, upon terms and conditions reasonably acceptable to Blue
River and Heartland, all consents, authorizations, approvals, registrations and
certificates, to complete all filings and applications and to satisfy all other
requirements prescribed by law which are necessary for consummation of the
Company Merger on the terms and conditions provided in this Agreement at the
earliest possible reasonable date.
(b) Blue River and Shelby County Bank will proceed expeditiously,
cooperate fully and use their reasonable efforts to assist Heartland Bank in
procuring upon reasonable terms and conditions all consents, authorizations,
approvals, registrations and certificates, in completing all filings and
applications and in satisfying all other requirements prescribed by law which
are necessary for consummation of the Bank Merger on the terms and conditions
provided in this Agreement at the earliest possible reasonable date.
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(c) Any materials or information provided by Blue River or Shelby County
Bank for use by Heartland or Heartland Bank in any filing with any state or
federal regulatory agency or authority shall not contain any untrue or
misleading statement of material fact and shall not omit to state a material
fact necessary to make the statements contained therein, in light of the
circumstances in which they are made, not false or misleading.
(d) Blue River will use reasonable efforts to list for trading on the
Nasdaq National Market System (subject to official notice of issuance), as the
case may be, prior to the Effective Time, the shares of Blue River Common Stock
to be issued in the Company Merger.
7.04. Conduct of Business.
(a) Except as set forth in the Blue River Disclosure Schedule, on and
after the date of this Agreement and until the Effective Time or until this
Agreement shall be terminated as herein provided, neither Blue River nor the
Blue River Subsidiaries shall, without the prior written consent of Heartland or
Heartland Bank:
(i) issue additional capital stock or make any changes in
its capital stock accounts (including, without
limitation, any stock split, stock dividend,
recapitalization or reclassification), except for the
issuance of up to 217,350 shares of Blue River Common
Stock under the Blue River Stock Option Plans;
(ii) authorize a class of stock or issue, or authorize the
issuance of, securities other than or in addition to the
issued and outstanding common stock as set forth in
Section 4.03 hereof;
(iii) distribute or pay any dividends on its shares of common
stock, or make any other distribution to its
shareholders except that the Blue River Subsidiaries may
pay cash dividends to Blue River in the ordinary course
of business;
(iv) redeem or purchase any of its outstanding shares of
common stock;
(v) merge, combine or consolidate or effect a share exchange
with or sell substantially all of its assets or any
securities issued by it to any other person, corporation
or entity;
(vi) purchase any assets or securities or assume any
liabilities of another bank holding company, bank,
corporation or other entity, except in the ordinary
course of business;
(vii) issue any letter of credit or accept any deposit, except
in the ordinary course of business in accordance with
its existing banking practices;
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(viii) except for the acquisition or disposition in the
ordinary course of business of other real estate owned,
acquire or dispose of any real or personal property or
fixed asset constituting a capital investment in excess
of $25,000 individually or $100,000 in the aggregate;
(ix) subject any of its properties or assets to a mortgage,
lien, claim, charge, option, restriction, security
interest or encumbrance, except for tax and other liens
which arise by operation of law and with respect to
which payment is not past due or is being contested in
good faith by appropriate proceedings and except for
pledges or liens: (i) required to be granted in
connection with acceptance by Blue River or the Blue
River Subsidiaries of government deposits; (ii) granted
in connection with repurchase or reverse repurchase
agreements; or (iii) otherwise incurred in the ordinary
course of the conduct of its business;
(x) promote to a new position or increase the rate of
compensation or enter into any agreement to promote to
a new position or increase the rate of compensation, of
any director, officer or employee of Blue River or the
Blue River Subsidiaries (except for promotions and
compensation increases in the ordinary course of
business and in accordance with past practices and
established employment policies of Blue River and the
Blue River Subsidiaries which have been disclosed to
Heartland);
(xi) except as agreed to herein, execute, create, institute,
modify, amend or terminate (except with respect to any
amendments required by law, rule or regulation) any
pension, retirement, savings, stock purchase, stock
bonus, stock ownership, stock option, stock
appreciation or depreciation rights or profit sharing
plans, or any employment, deferred compensation,
consulting, bonus or collective bargaining agreement,
or any group insurance or health contract or policy, or
any other incentive, retirement, welfare or employee
welfare benefit plan, agreement or understanding for
current or former directors, officers or employees of
Blue River or the Blue River Subsidiaries, or change
the level of benefits or payments under any of the
foregoing, or increase or decrease any severance or
termination benefits or any other fringe or employee
benefits other than as required by law or regulatory
authorities or the terms of any of the foregoing;
(xii) except as agreed to herein, modify, amend or institute
new employment policies or practices, or enter into,
renew or extend any employment, indemnity,
reimbursement, consulting, compensation or severance
agreements with respect to any present
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or former directors, officers or employees of Blue
River or the Blue River Subsidiaries;
(xiii) hire or employ any new or additional officers of Blue
River or the Blue River Subsidiaries, except as
reasonably necessary for the proper operation of their
respective businesses;
(xiv) elect or appoint any executive officers or directors
of Blue River or the Blue River Subsidiaries who are
not presently serving in such capacities;
(xv) except for technical corrections or clarifications
amend, modify or restate Blue River's or the Blue
River Subsidiaries' respective organizational
documents (as described in Section 5.05 hereof) from
those in effect on the date of this Agreement and
delivered to Heartland hereunder;
(xvi) give, dispose of, sell, convey or transfer; assign,
hypothecate, pledge or encumber; or grant a security
interest in or option to or right to acquire any
shares of common stock or substantially all of the
assets of Blue River or enter into any agreement or
commitment relative to the foregoing;
(xvii) fail to continue to make additions to in accordance
with the Blue River Subsidiaries' past practices and
to otherwise maintain in all respects the Blue River
Subsidiaries' reserve for loan and lease losses, or
any other reserve account, in accordance with safe,
sound, and prudent banking practices and in accordance
with accounting principles generally accepted in the
United States and applied on a consistent basis;
(xviii) fail to accrue, pay, discharge and satisfy all debts,
liabilities, obligations and expenses, including, but
not limited to, trade payables, incurred in the
regular and ordinary course of business as such debts,
liabilities, obligations and expenses become due;
(xix) except for obligations disclosed within this Agreement
or the Blue River Disclosure Schedule or incurred in
the ordinary course of business, borrow any money;
(xx) open, close, move or, in any material respect, expand,
diminish, renovate, alter or change any of its offices
or branches;
(xxi) pay or commit to pay any management or consulting or
other similar type of fees other than in the ordinary
course of business or
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as disclosed within this Agreement or the Blue River
Disclosure Schedule; or
(xxii) enter into any agreement, arrangement or understanding
with respect to any of the foregoing.
(b) Blue River and the Blue River Subsidiaries shall maintain, or cause
to be maintained, in full force and effect, insurance on their respective
assets, properties and operations, fidelity coverage and directors' and
officers' liability insurance on their directors, officers and employees in such
amounts and with regard to such liabilities and hazards as are currently insured
by Blue River and the Blue River Subsidiaries as of the date of this Agreement.
7.05. Preservation of Business. On and after the date of this Agreement
and until the Effective Time or until this Agreement is terminated as herein
provided, Blue River and the Blue River Subsidiaries shall: (a) carry on their
respective businesses substantially in the manner as is presently being
conducted and in the ordinary course of business; (b) use their reasonable
efforts to preserve their business respective organizations intact, keep
available the services of the present officers and employees and preserve their
present relationships with customers and persons having business dealings with
them; (c) maintain all of the properties and assets that each of them owns or
utilizes in good operating condition and repair, reasonable wear and tear
excepted, and maintain insurance upon such properties and assets in amounts and
kinds comparable to that in effect on the date of this Agreement; (d) maintain
their respective books, records and accounts in the usual, regular and ordinary
manner, on a basis consistent with prior years and in compliance with all
material respects with all statutes, laws, rules and regulations applicable to
them and to the conduct of their business; and (e) not knowingly do or fail to
do anything which will cause a breach of, or default in, any contract,
agreement, commitment, obligation, understanding, arrangement, lease or license
to which any one of them is a party or by which any one of them is or may be
subject or bound.
7.06. Other Negotiations.
(a) On and after the date of this Agreement and until the Effective Time
or until this Agreement is terminated as herein provided, except with the prior
written approval of Heartland, neither Blue River nor the Blue River
Subsidiaries shall permit nor authorize their respective directors, officers,
employees, agents or representatives to, directly or indirectly, initiate,
solicit or encourage, or provide information to, any corporation, association,
partnership, person or other entity or group concerning any merger,
consolidation, share exchange, combination, purchase or sale of substantial
assets, sale of shares of common stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing the right to acquire, capital stock) or similar transaction relating
to Blue River or the Blue River Subsidiaries or to which Blue River or the Blue
River Subsidiaries may become a party (all such transactions are hereinafter
referred to as "Blue River Acquisition Transactions").
(b) Blue River shall promptly communicate to Heartland the terms of any
proposal, indication of interest, or offer which Blue River or the Blue River
Subsidiaries may receive with
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respect to a Blue River Acquisition Transaction. Blue River or the Blue River
Subsidiaries may, in response to an unsolicited written proposal, indication of
interest, or offer with respect to a Blue River Acquisition Transaction from a
third party, furnish information to, and negotiate, explore or otherwise engage
in substantive discussions with such third party, and enter into agreements,
arrangements or understandings with such third party with respect to such Blue
River Acquisition Transaction, in each case, only if Blue River's Board of
Directors determines in good faith by majority vote, after consultation with
Blue River's financial advisors and outside legal counsel in a meeting duly
called and held in accordance with Blue River's Bylaws, that failing to take
such action would likely be inconsistent with the fiduciary duties of the
members of Blue River's Board of Directors to Blue River, and that the terms of
the Blue River Acquisition Transaction are superior to the terms of the Company
Merger from a financial point of view.
(c) This Section 7.06 shall not authorize Blue River or the Blue River
Subsidiaries or any of their directors, officers, employees, agents or
representatives, to initiate any discussions or negotiations with respect to a
Blue River Acquisition Transaction with a third party.
7.07. Press Releases. Blue River shall use reasonable efforts (i) to
develop a joint communications plan with Heartland, (ii) to ensure that all
press releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications plan, and
(iii) except in respect of any announcement required by applicable law or by
obligations pursuant to any listing agreement with or rules of NASDAQ, to
consult with Heartland before issuing any press release or, to the extent
practical, otherwise making any public statement with respect to this Agreement
or the transactions contemplated hereby. In addition to the foregoing, except to
the extent disclosed in or consistent with the Joint Proxy Statement/Prospectus,
Blue River shall not issue any press release or otherwise make any public
statement or disclosure concerning Heartland or Heartland Bank, their respective
business, financial condition or results of operations without the consent of
Heartland, which consent shall not be unreasonably withheld or delayed.
7.08. Blue River Disclosure Schedule Update. Blue River shall promptly
supplement, amend and update, upon the occurrence of any change prior to the
Effective Time, and as of the Effective Time, the Blue River Disclosure Schedule
with respect to any matters or events hereafter arising which, if in existence
or having occurred as of the date of this Agreement, would have been required to
be set forth or described in the Blue River Disclosure Schedule or this
Agreement and including, without limitation, any fact which, if existing or
known as of the date hereof, would have made any of the representations or
warranties of Blue River contained herein incorrect, untrue or misleading. No
such supplement, amendment or update shall become part of the Blue River
Disclosure Schedule unless Heartland shall have first consented in writing with
respect thereto.
7.09. Information, Access Thereto, Confidentiality.
(a) Heartland and its respective representatives and agents shall, upon
48 hours' prior notice and during normal business hours prior to the Effective
Time, have reasonable access to
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the properties, facilities, operations, books and records of Blue River and the
Blue River Subsidiaries. Heartland and its respective representatives and agents
may, prior to the Effective Time, make or cause to be made such reasonable
investigation of the operations, books, records and properties of Blue River and
the Blue River Subsidiaries and of their financial and legal condition as they
deem necessary or advisable; provided, however, that such access or
investigation shall not interfere with the normal business operations of Blue
River and the Blue River Subsidiaries. Blue River and the Blue River
Subsidiaries will cooperate with Heartland and the Heartland Bank in their
efforts to effect a smooth transition of operations following the Effective
Time. In addition, Blue River and the Blue River Subsidiaries will cooperate
with any environmental consulting firm designated by Heartland in connection
with the conduct by such firm of an environmental investigation on all real
property owned or leased by Blue River or the Blue River Subsidiaries as of the
date of this Agreement and any real property acquired or leased by them after
the date of this Agreement. Upon request, Blue River and the Blue River
Subsidiaries shall furnish Heartland, or its respective representatives or
agents, their attorneys' responses to external auditors requests for
information, management letters received from their external auditors and such
financial, loan and operating data and other information reasonably requested by
Heartland which has been or is developed by Blue River or the Blue River
Subsidiaries, their auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by Blue River or the
Blue River Subsidiaries of any claim of attorney-client privilege), and will
permit Heartland and its respective representatives or agents to discuss such
information directly with any individual or firm performing auditing or
accounting functions for Blue River and the Blue River Subsidiaries, and such
auditors and accountants shall be directed to furnish copies of any reports or
financial information as developed to Heartland or its respective
representatives or agents. Heartland shall not use any such information obtained
pursuant to this Agreement for any purpose unrelated to the Mergers. Any
confidential information or trade secrets received by Heartland or its
representatives or agents in the course of such examination (whether conducted
prior to or after the date of this Agreement) shall be treated confidentially,
and any correspondence, memoranda, records, copies, documents and electronic or
other media of any kind containing such confidential information or trade
secrets or both shall be destroyed by Heartland or, at Blue River's request,
returned to Blue River in the event this Agreement is terminated as provided in
Section 9 hereof.
(b) Blue River shall not use any information obtained pursuant to this
Agreement or in contemplation of the Mergers, including any information obtained
as a result of their officers and employees participating in training programs
or meetings of Heartland or Heartland Bank, for any purpose unrelated to the
Mergers. Any confidential information or trade secrets received by Blue River or
the Blue River Subsidiaries or their representatives or agents pursuant to this
Agreement or in contemplation of the Mergers (whether conducted prior to or
after the date of this Agreement) shall be treated confidentially, and any
correspondence, memoranda, records, copies, documents and electronic or other
media of any kind containing such confidential information or trade secrets or
both shall be destroyed by Blue River or, at Heartland's request, returned to
Heartland in the event this Agreement is terminated as provided in Section 9
hereof.
(c) This Section 7.09 shall not require any party to disclose any
information to any other party which would be prohibited by law; provided that,
if any information is withheld on
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the basis that disclosure of such would be prohibited by law, such party shall
advise the other party in writing of the type and nature of the information that
is not being disclosed and the basis for that party's legal conclusion that
providing that information would be illegal.
7.10. Subsequent Blue River Financial Statements. As soon as reasonably
available after the date of this Agreement, Blue River shall deliver to
Heartland the monthly unaudited consolidated balance sheets and profit and loss
statements of Blue River prepared for its internal use, TFR Reports of the Blue
River Subsidiaries for each quarterly period completed prior to the Effective
Time, and all other financial reports or statements submitted to regulatory
authorities, including the SEC, after the date hereof, to the extent permitted
by law (collectively, the "Subsequent Blue River Financial Statements"). The
Subsequent Blue River Financial Statements shall be prepared on a basis
consistent with past accounting practices and accounting principles generally
accepted in the United States applied on a consistent basis to the extent
applicable (or, in the case of bank regulatory reports, in accordance with
applicable instructions and bank regulatory accounting principles and practices)
and shall present fairly in all material respects the financial condition,
results of operations and cash flows of the reporting entity as of the dates and
for the periods presented, subject to the absence of footnotes for interim
statements.
7.11. Employee Benefits.
(a) Prior to the Closing Date, Heartland shall with Blue River cooperate
in reviewing, evaluating and analyzing the Heartland Benefit Plans and Blue
River Benefit Plans with a view towards developing appropriate new benefit plans
for the employees covered thereby subsequent to the Mergers. It is the intention
of Blue River and Heartland to develop new benefit plans, as soon as reasonably
practicable after the Effective Time, which, among other things, (i) treat
similarly situated employees on a substantially equivalent basis, taking into
account all relevant factors, including, without limitation, duties, geographic
location, tenure, qualifications and abilities, and (ii) do not discriminate
between employees of the Surviving Corporation who were covered by Blue River
Benefit Plans, on the one hand, and those covered by Heartland Benefit Plans, on
the other, at the Effective Time.
(b) The foregoing notwithstanding, the Surviving Corporation agrees (i)
to honor in accordance with their terms all benefits vested as of the date
hereof under the Heartland Benefit Plans or the Blue River Benefit Plans or
under other contracts, arrangements, commitments, or understandings described in
the Disclosure Schedule and the Blue River Disclosure Schedule, and (ii) to
continue, through at least the time period ending on the second anniversary of
the Effective Time, the executive supplemental retirement income and split
dollar insurance plans or arrangements with the four executive officers of
Heartland and Heartland Bank who are named in the documents filed as Exhibits
10.2 through 10.5 to Heartland's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2004 (the "Heartland Executives"), and which plans or
arrangements are evidenced by Exhibits 10.1 through 10.5 to that report.
7.12. Reports. Promptly upon its becoming available, Blue River shall
furnish to Heartland one (1) copy of each financial statement, report, notice,
or proxy statement sent by Blue River to its shareholders generally and of each
regular or periodic report, registration
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statement or prospectus filed by Blue River with the SEC or any successor
agency, and of any order issued by any Governmental Authority in any proceeding
to which Blue River or the Blue River Subsidiaries is a party, other than orders
in relation to non-dispositive motions that are entered in proceedings to which
Blue River or the Blue River Subsidiaries are parties in connection with the
ordinary course of their businesses.
7.13. Indemnification.
(a) From and after the Effective Time, Blue River shall indemnify,
defend and hold harmless to the fullest extent permitted by applicable federal
and state law (subject to the policies and principles of Federal Reserve Board
Supervisory Letter SR 02-17 (July 8, 2002) and the laws and regulations referred
to in such Letter) each person who is on the date hereof, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, a
director or officer of Heartland or was serving at the request of Heartland as a
director or an officer of any domestic or foreign corporation, joint venture,
trust, employee benefit plan (collectively, the "Heartland Indemnitees") against
any and all losses and expenses in connection with or arising out of any claim
which is based upon, arises out of or in any way relates to any actual or
alleged act or omission occurring at or prior to the Effective Time in the
Heartland Indemnitee's capacity as a director or officer (whether elected or
appointed) of Heartland (or in the course of the requested service described
above), to the fullest extent as such Heartland Indemnitees would have been
entitled to such indemnity, defense and hold harmless protection under the
provisions of Heartland's Articles of Incorporation or By-Laws in effect at the
Effective Time.
(b) In the event Blue River or any of its successors or assigns (i)
consolidates with or merges into any other corporation or entity and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person or entity, then, and in each case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
Blue River assume the obligations set forth in this Section 7.13.
(c) Blue River shall maintain in effect for not less than two (2) years
from the Effective Time the policies of directors' and officers' liability
insurance most recently maintained by Heartland with respect to claims that may
be made during that two-year period against the persons covered by such policies
as of the Effective Time that relate to matters that occurred prior to the
Effective Time; provided, however, that Blue River may substitute therefor
policies with reputable and financially sound carriers for substantially similar
coverage containing terms and conditions which are no less advantageous for so
long as such substitution does not result in gaps or lapses in coverage with
respect to claims arising from or relating to matters occurring prior to the
Effective Time; and provided, further, that Blue River shall not be obligated to
make annual premium payments for such insurance to the extent such premiums
exceed 200% of the premiums paid as of the date hereof by Heartland for such
insurance ("Heartland's Current Premium"), and if such premiums for such
insurance would at any time exceed 200% of Heartland's Current Premium, then
Blue River shall cause to be maintained policies of insurance which, in Blue
River's good faith determination, provide the maximum coverage available at an
annual premium equal to 200% of Heartland's Current Premium.
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(d) The provisions of this Section 7.13 are intended to be for the
benefit of, and shall be enforceable by, each Heartland Indemnitee and their
respective heirs and representatives
7.14. Adverse Actions. Blue River shall not (a) knowingly take any action
while knowing that such action would, or is reasonably likely to, prevent or
impede the Mergers from qualifying as a reorganization within the meaning of
Section 368 of the Code; or (b) knowingly take any action or inaction that is
intended or is reasonably likely to result in (i) any of its representations and
warranties set forth in this Agreement being or becoming untrue, subject to the
Blue River Disclosure Standard, in any respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Mergers set forth in Section 8
not being satisfied, (iii) a material violation of any provision of this
Agreement or (iv) a delay in the consummation of the Mergers except, in each
case, as may be required by applicable law or regulation.
7.15. By-Law Amendments; Directors; Officers; Resignations. Prior to the
Effective Time, (a) Blue River shall amend and restate its Bylaws, subject to
the consummation of the Company Merger and effective at the Effective Time, as
may be necessary or appropriate to reflect or implement the changes in name,
corporate structure, board of directors structure, and management structure that
will result from the consummation of the Company Merger, the text of which
amendment and restatement shall be subject to the consent of Heartand, which
shall not be unreasonably withheld, (b) Blue River's Board of Directors shall
cause the number of directors that will comprise the full Board of Directors of
the Surviving Corporation at the Effective Time to be fixed at nine, (c) the
Blue River Board of Directors shall take such actions as are necessary to cause
the persons indicated in Section 1.01(d) to be elected or appointed to the
offices of the Surviving Corporation specified in such Section 1.01(d) as of the
Effective Time, and (d) Blue River shall obtain (without the payment of any
compensation therefor) the resignations, effective at the Effective Time, of
those members of the Blue River Board of Directors and those officers of Blue
River who are not among those who are listed in Section 1.01(e).
SECTION 8
CONDITIONS PRECEDENT TO THE MERGERS
8.01. Blue River. The obligations of Blue River and Shelby County Bank to
consummate the Mergers are subject to the satisfaction and fulfillment of each
of the following conditions on or prior to the Closing Date, unless waived in
writing by Blue River:
(a) Representations and Warranties at Closing Date. Each of the
representations and warranties of Heartland with respect to itself and Heartland
Bank contained in this Agreement shall, subject to the Heartland Disclosure
Standard, be true and correct at and as of the Closing Date (unless such
representation and warranty specifically speaks as of any other time, in which
event such representation and warranty shall be true and correct as of such
other time) as though such representations and warranties had been made or given
on and as of the Closing Date, subject to such exceptions as do not have and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect upon Heartland, and Blue River shall
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have received a certificate signed on behalf of Heartland by the Chief Executive
Officer and the Chief Financial Officer of Heartland to such effect.
(b) Covenants. Each of the covenants and agreements of Heartland with
respect to itself and Heartland Bank shall have been fulfilled or complied with
in all material respects from the date of this Agreement through the Closing
Date, and Blue River shall have received a certificate signed on behalf of
Heartland by the Chief Executive Officer and the Chief Financial Officer of
Heartland to such effect.
(c) Deliveries at Closing. Blue River shall have received from Heartland
at the Closing (as hereinafter defined) the items and documents, in form and
content reasonably satisfactory to Blue River, set forth in Section 10.02(b)
hereof.
(d) Registration Statement Effective. Blue River shall have registered
its shares of common stock to be issued to shareholders of Heartland in
accordance with this Agreement with the SEC pursuant to the Securities Act, and
all state securities and Blue Sky approvals, authorizations and exemptions
required to offer and sell such shares shall have been received by Blue River.
The Registration Statement with respect thereto shall have been declared
effective by the SEC and no stop order shall have been issued or threatened.
(e) Redemption of Rights. Heartland shall have provided written
certification to Blue River dated the Closing Date that the Rights granted to
holders of Heartland Common Stock under the Rights Agreement have been redeemed,
effective at the Effective Time.
(f) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the board of directors of Blue
River reasonably determines in good faith would have a Material Adverse Effect
after the Effective Time on the present or prospective consolidated financial
condition, business or operating results of the Surviving Corporation.
(g) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of either of the Mergers shall be in effect. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to either of the Mergers, by any Governmental
Authority of competent jurisdiction, which makes the consummation of either of
the Mergers illegal.
(h) Heartland Shareholder Approval. The shareholders of Heartland shall
have approved and adopted this Agreement as required by applicable law and its
Articles of Incorporation. Heartland as the sole shareholder of Heartland Bank
shall have approved and adopted this Agreement as required by applicable law and
Heartland Bank's Articles of Incorporation.
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(i) Blue River Shareholder Approval. The shareholders of Blue River
shall have approved and adopted this Agreement as required by applicable law and
its Articles of Incorporation. Blue River as the sole shareholder of Shelby
County Bank shall have approved and adopted this Agreement as required by
applicable law and Shelby County Bank's Charter.
(j) Tax Opinion. The Board of Directors of Blue River shall have
received a written opinion of the law firm of Xxxxx XxXxxxx LLP, dated as of the
Closing Date, in form and content satisfactory to Blue River, to the effect that
the Mergers to be effected pursuant to this Agreement will constitute a tax-free
reorganization under the Code (as described in Section 1.03 hereof) to each
party hereto and to the shareholders of Blue River, except with respect to cash
received by Heartland shareholders for fractional shares resulting from
application of the Exchange Ratio. In rendering such opinion, counsel may
require and rely upon customary representation letters of the parties hereto and
rely upon customary assumptions.
(k) Heartland Fairness Opinion. Heartland's investment banker shall have
issued (as of a date on or about the date of the mailing of the proxy statement
relating to the Company Merger to be mailed to the shareholders of Heartland)
its fairness opinion stating that the Exchange Ratio is fair to the shareholders
of Heartland from a financial point of view.
(l) Blue River Fairness Opinion. Blue River's investment banker shall
have issued (as of a date on or about the date of the mailing of the proxy
statement relating to the Company Merger to be mailed to the shareholders of
Blue River) its fairness opinion stating that the Exchange Ratio is fair to the
shareholders of Blue River from a financial point of view.
(m) NASDAQ Listing. Blue River shall have listed its shares of common
stock to be issued to the shareholders of Heartland in accordance with this
Agreement on either the NASDAQ SmallCap Market or the NASDAQ National Market
System.
(n) Dissenters Rights. Shareholders of Heartland and Blue River who have
timely notified Heartland and Blue River of their intent to exercise dissenters
rights under the IBCL shall not hold shares of Heartland Common Stock and Blue
River Common Stock that, in the aggregate and giving effect to the conversion of
Heartland Common Stock into Blue River Common Stock at the Exchange Ratio, would
represent more than 10 percent of the number of shares of Blue River Common
Stock that would be issued and outstanding immediately after the Effective Time
had no shareholders of either company provided notice of their intent to
exercise dissenters rights.
8.02. Heartland. The obligations of Heartland and Heartland Bank to
consummate the Mergers are subject to the satisfaction and fulfillment of each
of the following conditions on or prior to the Closing Date, unless waived in
writing by Heartland:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of Blue River with respect to itself and the Blue
River Subsidiaries contained in this Agreement shall, subject to the Blue River
Disclosure Standard, be true and correct at and as of the Closing Date (unless
such representation and warranty specifically speaks as of any other time, in
which event such representation and warranty shall be true and correct as of
such other
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time) as though such representations and warranties had been made or given on
and as of the Closing Date, subject to such exceptions as do not have and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect upon Blue River, and Heartland shall have received a certificate
signed on behalf of Blue River by the Chief Executive Officer and the Chief
Financial Officer of Blue River to such effect.
(b) Covenants. Each of the covenants and agreements of Blue River with
respect to itself and the Blue River Subsidiaries shall have been fulfilled or
complied with in all material respects from the date of this Agreement through
the Closing Date, and Heartland shall have received a certificate signed on
behalf of Blue River by the Chief Executive Officer and the Chief Financial
Officer of Blue River to such effect.
(c) Deliveries at Closing. Heartland shall have received from Blue River
at the Closing the items and documents, in form and content reasonably
satisfactory to Heartland, listed in Section 10.02(a) hereof.
(d) Registration Statement Effective. Blue River shall have registered
its shares of common stock to be issued to shareholders of Heartland in
accordance with this Agreement with the SEC pursuant to the Securities Act, and
all state securities and Blue Sky approvals, authorizations and exemptions
required to offer and sell such shares shall have been received by Blue River.
The Registration Statement with respect thereto shall have been declared
effective by the SEC and no stop order shall have been issued or threatened.
(e) Redemption of Rights. Heartland shall have provided written
certification to Blue River dated the Closing Date that the Rights granted to
holders of Heartland Common Stock under the Rights Agreement have been redeemed,
effective at the Effective Time.
(f) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the board of directors of
Heartland reasonably determines in good faith would have a Material Adverse
Effect after the Effective Time on the present or prospective consolidated
financial condition, business or operating results of the Surviving Corporation.
(g) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of either of the Mergers shall be in effect. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to either of the Mergers, by any Governmental
Authority of competent jurisdiction, which makes the consummation of either of
the Mergers illegal.
(h) Heartland Shareholder Approval. The shareholders of Heartland shall
have approved and adopted this Agreement as required by applicable law and its
Articles of Incorporation. Heartland as the sole shareholder of Heartland Bank
shall have approved and
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adopted this Agreement as required by applicable law and Heartland Bank's
Articles of Incorporation.
(i) Blue River Shareholder Approval. The shareholders of Blue River
shall have approved and adopted this Agreement as required by applicable law and
its Articles of Incorporation. Heartland as the sole shareholder of Shelby
County Bank shall have approved and adopted this Agreement as required by
applicable law and Shelby County Bank's Charter.
(j) Tax Opinion. The Board of Directors of Heartland shall have received
a written opinion of the law firm of Xxxxx XxXxxxx LLP, dated as of the Closing
Date, in form and content satisfactory to Heartland, to the effect that the
Mergers to be effected pursuant to this Agreement will constitute a tax-free
reorganization under the Code (as described in Section 1.03 hereof) to each
party hereto and to the shareholders of Heartland, except with respect to cash
received by Heartland shareholders for fractional shares resulting from
application of the Exchange Ratio. In rendering such opinion, counsel may
require and rely upon customary representation letters of the parties hereto and
rely upon customary assumptions.
(k) Heartland Fairness Opinion. Heartland's investment banker shall have
issued (as of a date on or about the date of the mailing of the proxy statement
relating to the Company Merger to be mailed to the shareholders of Heartland)
its fairness opinion stating that the Exchange Ratio is fair to the shareholders
of Heartland from a financial point of view.
(l) Blue River Fairness Opinion. Blue River's investment banker shall
have issued (as of a date on or about the date of the mailing of the proxy
statement relating to the Company Merger to be mailed to the shareholders of
Blue River) its fairness opinion stating that the Exchange Ratio is fair to the
shareholders of Blue River from a financial point of view.
(m) NASDAQ Listing. Blue River shall have listed its shares of common
stock to be issued to the shareholders of Heartland in accordance with this
Agreement on either the NASDAQ SmallCap Market or the NASDAQ National Market
System.
(n) Dissenters Rights. Shareholders of Heartland and Blue River who have
timely notified Heartland and Blue River of their intent to exercise dissenters
rights under the IBCL shall not hold shares of Heartland Common Stock and Blue
River Common Stock that, in the aggregate and giving effect to the conversion of
Heartland Common Stock into Blue River Common Stock at the Exchange Ratio, would
represent more than 10 percent of the number of shares of Blue River Common
Stock that would be issued and outstanding immediately after the Effective Time
had no shareholders of either company provided notice of their intent to
exercise dissenters rights.
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SECTION 9
TERMINATION OF MERGERS
9.01. Manner of Termination. This Agreement and the Mergers may be
terminated at any time prior to the Effective Time by written notice delivered
by Blue River to Heartland, or by Heartland to Blue River, as follows:
(a) By Blue River or Heartland:
(i) if the Mergers contemplated by this Agreement have not
been consummated by June 30, 2005; provided, however,
that a party hereto in willful breach of or willful
default hereunder shall have no right to terminate this
Agreement pursuant to this Section 9.01(a)(i); or
(ii) if the respective Boards of Directors of Blue River and
Heartland mutually agree to terminate this Agreement; or
(iii) if any of the conditions to the obligations of the
terminating party specified by Section 8 are not
satisfied or waived on or prior to the Closing Date
fixed by Section 10.01 (other than as a result of any
willful breach of this Agreement by the terminating
party), and any applicable cure period provided in this
Agreement has lapsed.
(b) By Blue River, if:
(i) at any time prior to the Effective Time, Blue River's
Board of Directors so determines, in the event of
either:
(A) a breach by Heartland of any representation or
warranty contained herein (other than those
breaches that do not have and would not reasonably
be expected to have, individually or in the
aggregate, a Material Adverse Effect on
Heartland), which breach cannot be or has not been
cured within thirty (30) days after the giving of
written notice to Heartland of such breach; or
(B) a breach by Heartland in any material respect of
any of the covenants or agreements contained
herein, which breach cannot be or has not been
cured within thirty (30) days after the giving of
written notice to Heartland of such breach; or
(ii) an event has occurred or facts or circumstances shall
have come to exist which, directly or indirectly,
individually or taken together with all other facts,
circumstances and events, has had, or is
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reasonably likely to have, a Material Adverse Effect,
upon Heartland; or
(iii) Heartland fulfills the requirements of Section 6.01
hereof but the shareholders of Heartland do not approve
and adopt the Company Merger and this Agreement by the
requisite vote; or
(iv) After fulfillment of the requirements of Section 7.06
hereof, the Board of Directors of Blue River authorizes
Blue River to enter into an agreement, arrangement or
understanding with a third party with respect to a Blue
River Acquisition Transaction.
(c) By Heartland, if:
(i) at any time prior to the Effective Time, Heartland's
Board of Directors so determines, in the event of either
(A) a breach by Blue River of any representation or
warranty contained herein (other than those
breaches that do not have and would not reasonably
be expected to have, individually or in the
aggregate, a Material Adverse Effect on Blue
River), which breach cannot be or has not been
cured within thirty (30) days after the giving of
written notice to Blue River of such breach; or
(B) a breach by Blue River in any material respect of
any of the covenants or agreements contained
herein, which breach cannot be or has not been
cured within thirty (30) days after the giving of
written notice to Blue River of such breach; or
(ii) an event has occurred or facts or circumstances shall
have come to exist which, directly or indirectly,
individually or taken together with all other facts,
circumstances and events, has had, or is reasonably
likely to have, a Material Adverse Effect, upon Blue
River; or
(iii) Blue River fulfills the requirements of Section 7.01
hereof but the shareholders of Blue River do not approve
and adopt the Company Merger and this Agreement by the
requisite vote; or
(iv) After the fulfillment of the requirements of Section
6.06 hereof, the Board of Directors of Heartland
authorizes Heartland to enter into an agreement,
arrangement or understanding with a third party with
respect to an Acquisition Transaction.
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9.02. Effect of Termination. Upon termination by written notice, this
Agreement shall be of no further force or effect, and there shall be no further
obligations or restrictions on future activities on the part of Blue River or
Heartland and their respective directors, officers, employees, agents and
shareholders, except as provided in compliance with: (i) the confidentiality
provisions of this Agreement set forth in Section 6.10 and 7.09 hereof and the
Confidentiality Agreement dated April 26, 2004, by and between Blue River and
Heartland (the "Confidentiality Agreement"); (ii) the payment of expenses set
forth in Section 11.10 hereof; and (iii) the payment of equal portions of the
fee of Xxxxx Xxxxxx and Company LLC; provided, however, that termination will
not in any way release a breaching party from liability for any willful breach
of this Agreement giving rise to such termination.
SECTION 10
CLOSING
10.01. Closing Date and Place. The closing of the Mergers ("Closing")
shall take place in Indianapolis, Indiana, at a place designated by Blue River,
on the last business day of the first month during which all of the conditions
specified by subsections (f), (h) and (i) of Sections 8.01 and 8.02 have been
satisfied, or on such later or earlier date as Heartland and Blue River may
agree (the "Closing Date"). The parties shall use their best efforts to cause
the Effective Time to occur, subject to satisfaction or waiver of all conditions
to Closing, on the same date as the Closing Date.
10.02. Deliveries.
(a) At the Closing, Blue River shall deliver to Heartland the following:
(i) the officers' certificates contemplated by Section 8.02
hereof;
(ii) copies of all approvals by government regulatory
agencies addressed to or obtained by Blue River or
Shelby County Bank that are necessary to consummate the
Mergers;
(iii) copies of (A) the resolutions adopted by the Board of
Directors of Blue River certified by the Secretary of
Blue River, relative to the approval of this Agreement
and the Company Merger and (B) the resolutions of the
Board of Directors and sole shareholder of Shelby County
Bank, certified by its Secretary relative to the
approval of this Agreement and Bank Merger;
(iv) an opinion of its counsel dated as of the Effective Time
reasonably acceptable to Heartland; and
(v) such other documents as Heartland or its legal counsel
may reasonably request.
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(b) At the Closing, Heartland shall deliver to Blue River the following:
(i) the officers' certificate contemplated by Section 8.01
hereof;
(ii) copies of all approvals by government regulatory
agencies addressed to or obtained by Heartland or
Heartland Bank necessary to consummate the Mergers;
(iii) copies of (A) the resolutions adopted by the Board of
Directors of Heartland certified by the Secretary of
Heartland, relative to the approval of this Agreement
and the Company Merger and (B) the resolutions of the
Board of Directors and sole shareholder of Heartland
Bank, certified by its Secretary relative to the
approval of this Agreement and Bank Merger;
(iv) an opinion of its counsel dated as of the Effective Time
reasonably acceptable to Blue River; and
(v) such other documents as Blue River or its legal counsel
may reasonably request.
SECTION 11
MISCELLANEOUS
11.01. Non-survival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than the Option
Agreements, which shall terminate in accordance with their terms), including any
rights arising out of any breach of such representations, warranties, covenants,
and agreements, shall survive the Effective Time, except for those covenants and
agreements contained herein and therein that by their terms apply or are to be
performed in whole or in part after the Effective Time.
11.02. Binding Effect; Assignment. This Agreement and the recitals hereof
shall be binding upon and inure to the benefit of the respective parties hereto
and their respective successors and assigns; provided, however, that this
Agreement may not be assigned by any party hereto without the prior written
consent of the other parties hereto. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their successors and assigns, and they shall not be construed
as conferring any rights on any other persons, except that the provisions of
Section 6.15, 7.11(b)(ii), and 7.13, (i) are intended to be for the benefit of,
and shall be enforceable by, each Indemnitee, Heartland Indemnitee, and
Heartland Executive, and his or her heirs and representatives and (ii) are in
addition to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
11.03. Waiver; Amendment.
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(a) The parties may by an instrument in writing extend the time for the
performance of or otherwise amend any of the covenants, conditions or agreements
set forth in this Agreement, except that the consideration to be received by the
Heartland shareholders shall not be decreased, or increased, by such an
amendment following the adoption and approval of the Company Merger and this
Agreement by the Heartland shareholders and the Blue River shareholders,
respectively. Either of the holding company parties by an instrument in writing
(i) may waive any inaccuracies in the representations or warranties of the other
holding company party or its subsidiaries contained in this Agreement or in any
document delivered pursuant hereto; (ii) waive the performance by the other
holding company party or its subsidiaries of any of the covenants or agreements
to be performed by it or them under this Agreement; or (iii) waive the
satisfaction or fulfillment of any condition, the satisfaction or fulfillment of
which is a condition to the obligation of the holding company party so waiving
to consummate the Mergers. The waiver by any party hereto of a breach of or
noncompliance with any provision of this Agreement shall not operate or be
construed as a continuing waiver or a waiver of any other or subsequent breach
or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only by a
written agreement executed by the parties hereto.
11.04. Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by
overnight courier, or by registered or certified mail (postage prepaid and
return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by it by like notice):
If to Blue River or Shelby County Bank: with a copy to (which shall not
constitute notice):
Blue River Bancshares, Inc. Xxxxx XxXxxxx LLP
00 Xxxx Xxxxxxxxxx Xxxxxx Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxx 00000 Xxxxxxxxxxxx, Xxxxxxx 00000-0000
ATTN: Xxxxxxx Xxxxxxx, III ATTN: Xxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
If to Heartland or Heartland Bank with a copy to (which shall not
constitute notice):
Heartland Bancshares, Inc. Ice Xxxxxx
000 Xxxxx Xxxxxx Xxxxxx Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000 Box 82001
ATTN: Xxxxxx X. Xxxxxxx Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000 ATTN: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000
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All such notices and other communications shall be deemed to have been duly
given as follows: when delivered by hand, if personally delivered; when
received, if delivered by registered or certified mail (postage prepaid and
return receipt requested); when receipt acknowledged, if faxed; and the next
business day after timely delivery to a recognized overnight courier service, if
delivered by overnight courier.
11.05. Headings. The headings in this Agreement have been inserted solely
for ease of reference and should not be considered in the interpretation or
construction of this Agreement.
11.06. Severability. Any term or provision of this Agreement which is
invalid or unenforceable shall be ineffective to the extent of such invalidity
or unenforceability and, unless the effect of such invalidity or
unenforceability would prevent the parties from realizing the major portion of
the economic benefits of the Mergers that they currently anticipate obtaining
therefrom, shall not render invalid or unenforceable the remaining terms and
provisions of this Agreement. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable.
11.07. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
11.08. Governing Law; Enforcement; Specific Performance; Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Indiana and applicable federal laws, without regard to principles of
conflicts of law. The parties hereto hereby agree that all claims, actions,
suits and proceedings between the parties hereto relating to this Agreement
shall be filed, tried and litigated only in the Circuit or Superior Court of
Xxxxxx County, Indiana or the United States District Court for the Southern
District of Indiana. In connection with the foregoing, the parties hereto
consent to the jurisdiction and venue of such courts and expressly waive any
claims or defenses of lack of personal jurisdiction of or proper venue by such
courts. The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms on a timely basis or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or other
equitable relief to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court identified
above, this being in addition to any other remedy to which they are entitled at
law or in equity. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, IN ANY MATTERS (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.09. Entire Agreement. This Agreement and, when executed and delivered,
the Option Agreements, supersede, terminate and render of no further force or
effect all other prior or contemporaneous understandings, commitments,
representations, negotiations or agreements, whether oral or written, among the
parties hereto relating to the Mergers or matters contemplated
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herein and constitutes the entire agreement between the parties hereto, except
for the Confidentiality Agreement, which shall continue in full force and effect
following the date hereof. The parties hereto agree that each party and its
counsel reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
11.10. Expenses. Blue River and Shelby County Bank shall pay their
expenses incidental to the Mergers contemplated hereby. Heartland and Heartland
Bank shall pay their expenses incidental to the Mergers contemplated hereby.
11.11. Certain References.
(a) Whenever in this Agreement a singular word is used, it also shall
include the plural wherever required by the context and vice-versa. Except
expressly stated otherwise, all references in this Agreement to periods of days
shall be construed to refer to calendar, not business, days. The term "business
day" shall mean any day except Saturday and Sunday when Shelby County Bank is
open for the transaction of business.
(b) References contained herein to the knowledge of either Heartland or
Blue River shall refer to the actual knowledge of the directors and executive
officers of Heartland or Blue River, as the case may be.
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IN WITNESS WHEREOF, Blue River, Shelby County Bank, Heartland and
Heartland Bank have made and entered into this Agreement as of the day and year
first above written and have caused this Agreement to be executed, attested in
counterparts and delivered by their duly authorized officers.
BLUE RIVER BANCSHARES, INC.
By: /s/ Xxxxxxx Xxxxxxx, III
------------------------------------
Xxxxxxx Xxxxxxx, III, Chairman and
Chief Executive Officer
ATTEST:
By: /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx, Secretary
SHELBY COUNTY BANK
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxx, President
ATTEST:
By: /s/ D. Xxxxxx Xxxxxxx
-----------------------------
D. Xxxxxx Xxxxxxx, Secretary
HEARTLAND BANCSHARES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, President and Chief
Executive Officer
ATTEST:
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx, Secretary
HEARTLAND COMMUNITY BANK
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, President and Chief
Executive Officer
ATTEST:
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx, Secretary
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VOTING AGREEMENT
Each of the undersigned directors of Heartland Bancshares, Inc.
("Heartland") hereby (a) agrees in his or her capacity as a director to
recommend to Heartland's shareholders the approval of this Agreement and the
Company Merger, except as otherwise provided in Sections 6.01 and 6.06 of this
Agreement, and (b) agrees in his or her individual capacity to vote his or her
shares of Heartland common stock that are registered in his or her personal name
(and agrees to use his or her reasonable efforts to cause all additional shares
of Heartland Common Stock owned jointly with any other person or by his or her
spouse or over which he or she has voting influence or control to be voted) in
favor of this Agreement and the Company Merger. In addition, each of the
undersigned directors hereby agrees not to make any transfers of shares of
Heartland with the purpose of avoiding his agreements set forth in the preceding
sentence.
Dated this 31st day of August, 2004.
/s/ Xxxx Xxxxxx
-------------------------------------
/s/ Xxxxxx X. Xxxxx
-------------------------------------
/s/ Xxxxxx X. Xxxx
-------------------------------------
/s/ Xxxxxxx X. Xxxxx
-------------------------------------
/s/ J. Xxxxxxx Xxxxxx
-------------------------------------
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
/s/ Xxxxx Xxxxxxx
-------------------------------------
/s/ Xxxxxx X. Xxxxxxxxxx*
-------------------------------------
* Agrees only to Part B
VOTING AGREEMENT
Each of the undersigned directors of Blue River Bancshares, Inc. ("Blue
River") hereby (a) agrees in his capacity as a director to recommend to Blue
River's shareholders the approval of this Agreement and the Company Merger,
except as otherwise provided in Sections 7.01 and 7.06 of this Agreement, and
(b) agrees in his individual capacity to vote his shares of Blue River Common
Stock that are registered in his personal name (and agrees to use his reasonable
efforts to cause all additional shares of Blue River Common Stock owned jointly
with any other person or by his spouse or over which he has voting influence or
control to be voted) in favor of this Agreement and the Company Merger. In
addition, each of the undersigned directors hereby agrees not to make any
transfers of shares of Blue River with the purpose of avoiding his agreements
set forth in the preceding sentence.
Dated this 31st day of August, 2004.
/s/ Xxxxxxx Xxxxxxx, III
-------------------------------
Xxxxxxx Xxxxxxx, III
/s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx X. XxXxxx
-------------------------------
Xxxxx X. XxXxxx
/s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxx
-------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
SCHEDULE OF EXHIBITS
Exhibit A - Form of Heartland Stock Option Agreement
Exhibit B - Form of Blue River Stock Option Agreement
Exhibit C - Amended and Restated Articles of Incorporation
Exhibit D - Form of Bank Merger Agreement
Exhibit E - Form of Heartland Affiliate Agreement
